Investing

Earnings Previews: BlackBerry, Rite Aid

Paul Ausick

Published: September 21, 2021 11:03 am

The first earnings reports we have covered for this week are coming after Tuesday’s closing bell and before Wednesday’s open: Adobe, FedEx, General Mills and Stitch Fix.

Here are two more, one due after markets close on Wednesday and the other before regular trading begins on Thursday.

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BlackBerry

Former cell phone giant BlackBerry Ltd. (NYSE: BB) has been transforming itself into a security and platform software vendor for the past few years. The share price has nearly doubled in the past 12 months, including a spike in late January when retail investors jumped on the stock and squeezed short sellers. Shares hit a high of nearly $29 and, even though they have given back two-thirds of that, the stock is still up 44% for the year to date. BlackBerry reports its fiscal 2022 second-quarter results late Wednesday.

Analysts are downbeat on the stock. Just nine brokerages cover the firm, with only two having a Hold rating on the stock and the other seven rating the shares a Sell or Strong Sell. The stock trades at around $9.50, above the median price target of $8. At the high price target of $11, the implied gain is about 16%.

The forecast for second-quarter revenue is $164.28 million, which would be down 5.6% sequentially and 38% year over year. Analysts expect the stock to post a per-share loss of $0.07, two cents worse than the first-quarter loss, and much worse than last year’s reported earnings per share (EPS) of $0.11. Current estimates for the full fiscal year call for a loss per share of $0.13, compared with last year’s EPS of $0.18, on sales of $781.62 million, down 12.5% year over year.

BlackBerry stock trades at 130.2 times forecast 2023 earnings of $0.08 per share and 31.4 times forecast 2024 earnings of $0.32 a share. The stock’s 52-week range is $4.37 to $28.77. BlackBerry does not pay a dividend.

Rite Aid

Retail drugstore operator Rite Aid Corp. (NYSE: RAD) reports fiscal 2022 second-quarter results before the open on Thursday. Over the past 12 months, the stock has added about 18%, including a share price spike to near $32.50 in late January. For the year to date, shares currently trade down less than 1%.

Rite Aid had a near-death experience about five years ago after failing to merge with Walgreens and the share price dipped to $5.30 before beginning a turnaround in August of 2019. The stock only added about 2.3% to its share price in 2020.

Few analysts pay attention to the shares, and none rates the stock above a Hold. At a price of around $15.80, the stock has outrun the median price target of $13 and the high price target of $13.00. Analysts bailed on the stock after the prior quarter’s results were announced and Rite Aid guided a fiscal year net loss of up to $0.79, while analysts had projected EPS of $0.80.

Second-quarter revenue is expected to come in at $6.21 billion, up about 0.8% sequentially and 3.8% year over year. The adjusted loss per share is forecast at $0.4,2 compared to EPS of $0.38 in the prior quarter and $0.25 per share in the second quarter of last year. For the full fiscal year, Rite Aid is expected to post a loss per share of $0.59, compared to last year’s loss of $0.15. Revenue is expected to increase by 4.5% to $25.13 billion.

Rite Aid is expected to post a loss in 2023 as well, and there is no estimate for 2024. For the fiscal year period 2022 through 2024, Rite Aid’s enterprise value-to-sales ratio is expected to remain flat at 0.3. The stock’s 52-week range is $8.86 to $32.48, and Rite Aid does not pay a dividend.