BlackBerry Ltd

BlackBerry Ltd (NYSE: BB) provides intelligent security software and serves governments and enterprises around the world. It secures nearly 175 million cars on the road today, with over 500 million endpoints.

Investment Rationale – Watch at USD 11.46

• From a technical standpoint, 14-day RSI (58.30) is not supporting the upside potential in the short-term.
• There was a substantial decline in revenue and profitability during Q1 FY21.
• Slow growth in software as compared to competitors.
• Due to the non-renewal of subscription and account cancellation amid Covid-19, the new customer churn rate remained subdued.

Risk Assessments

• The economic downturn continued to impact the automotive software business adversely.
• The Covid-19 disruption can also harm the supply chain and customer demand.
• Volatility in the financial market could also impact the Company’s ability to raise external funds.

Recent News

15 March 2021: BlackBerry announced a critical management solution in form of BlackBerry® Alert to assist commercial organisations respond to major events.

Quarterly Report for the period ended 30 November 2020 (as on 18 December 2020)

   (Source: Company Website)

• As of 20 November 2020, BB had nearly US$757 million in cash and investments against US$990 million in cash as of 29 February 2020.
• During Q3 FY21, the Company incurred a net loss of US$130 million post recognizing US$218 million in revenue.
• Further, the Company reported a US$0.07 diluted loss per share due to the financial and operational impact of the Covid-19.
• The pandemic also impacted the annual recurring revenue, and it further deteriorated in the Q3 FY21 from Q2 FY21.

Year Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

During Q3 FY21, the top-line and the bottom-line items of the income statement shown a significant decline. The Company’s QNX automotive software business is likely to remain impacted until early FY22 due to the economic downturn. Moreover, the Covid-19 adverse effect was also seen on the Software & Services business, which also affected the Company’s liquidity position. After reporting losses, the Company also need external funds to pursue growth opportunities. Therefore, the outlook seems gloomy to invest at the current position. Stock 52 week High and Low were USD 28.77 and USD 2.70, respectively.

Based on weak fundamentals, macroeconomic uncertainties, we have given a “Watch” stance on BlackBerry Ltd at the closing price of USD 11.46 (as on 16 March 2021), while we look forward to reviewing the recovery of the demand.

Zomedica Corp – Lossmaking overstretched entity amid market uncertainties.

Zomedica Corp (AMEX: ZOM) creates healthcare products and focusing on the unmet needs of clinical veterinarians. The Company’s portfolio expects to include medical devices and innovative diagnostics to increase the productivity of veterinarians.

Investment Rationale – Expensive at USD 2.26

• From a technical standpoint, 14-day RSI (56.92) is not supporting an upside potential.
• Most of the competitors possess more technical, financial, and human resources, which can impact the Company’s ability to compete even after the commercialization.
• The ability to generate revenue is dependent on the commercialization of products, subject to approval from regulatory authorities.
• The novel coronavirus has adversely affected the development of TRUFORMA® platform.
• The Group has a limited operating history and might take time to be profitable.

Risk Assessments

• Unfavourable regulatory developments can create challenges for the commercialization of products.
• ZOM does not generate any revenue yet, and therefore, it is dependent upon external funding for pursuing growth opportunities.
• The Covid-19 pandemic can result in the delay of contracts, and thus, it can impact the cash flows.
• The Company depends on third-party manufacturers, and thus, product candidates can be delayed if the supplier fails to maintain the consistent arrangements.

Recent News

16 March 2021: ZOM announced the first commercial sale of the TRUFORMA® platform. It uses Bulk Acoustic Wave technology, which is developed by Qorvo.

Financial Highlights for the fiscal year ended 31 December 2020 (as on 26 January 2021)

 (Source: Company Website)

• The Company is in a development stage with no commercial product yet, and thus, it did not generate any revenue in FY20.
• ZOM intended to launch the TRUFORMA® platform around 30 March 2021.
• During FY20, there was a 15% reduction in the comprehensive loss against FY19.
• As of 31 December 2020, the Company had cash and cash equivalents of nearly US$62.0 million.

One Year Share Price Chart    

 (Source: Refinitiv, chart created by Kalkine Group)

Conclusion

Zomedica is considerably dependent on the success of the TRUFORMA® platform, while the Company faces unproven markets for its products. The development is also dependent on suppliers, which is difficult to predict amid the Covid-19 pandemic. Moreover, the Company has a limited operating history and might never become profitable if it fails to commercialise the product and market it successfully. The Company also needs to raise additional capital to achieve its goals. Furthermore, it might fail to even compete in the market effectively as the medical device market is quite competitive with the presence of large players. Stock 52 week High and Low were USD 2.91 and USD 0.0628, respectively.

Based on the limited operating history, absence of revenue, competitive rivalry, and uncertain market conditions, we have given an “Expensive” stance on Zomedica Corp at the closing price of USD 2.26 (as on 16 March 2021), while we look to reviewing the performance of TRUFORMA® platform in the market.

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