BlackBerry Ltd (NYSE:BB) stock surged upwards on Friday. The company reported third-quarter results after the market closed on Thursday.

BlackBerry reported quarterly revenue of $143.00 million, missing the analyst consensus estimate of $161.49 million. The adjusted EPS was $0.02, beating analyst estimates.

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BlackBerry expects fourth-quarter revenue of $126.00 million – $135.00 million, versus estimates of $150.08 million. It expects adjusted EPS of $(0.01) – $0.01. Analysts rerated the stock after the quarterly print.

RBC Capital analyst Paul Treiber reiterated BlackBerry with a Sector Perform and a $3.25 price target.

BlackBerry’s third quarter marks its first quarter of financials without Cylance. The quarter exceeded Treiber’s estimates, though fourth-quarter guidance was short of his expectations.

Excluding Cylance (discontinued operations), third-quarter revenue was $143 million (-7% year-on-year), above Treiber’s estimated $128 million. All three revenue lines exceeded the analyst’s expectations: IoT ($62 million versus RBC and consensus at $58 million and $59 million), Secure Communications ($74 million versus RBC at $66 million), and Licensing ($7 million versus RBC and consensus at $4 million). Due to higher revenue, adjusted EBITDA was $35 million, above RBC at $13 million.

The fourth-quarter revenue guidance short of RBC. It calls for $126 million – $135 million in revenue, below RBC’s estimate of $138 million. The shortfall stems from Secure Communications ($62 million – $66 million versus RBC at $71 million). IoT guidance for $60 million – $65 million bracketed RBC estimate ($64 million). The mid-point of adjusted EBITDA guidance for $10 million – $20 million missed the RBC estimate of $19 million.

BlackBerry is now profitable and operating cash flow positive. However, Treiber noted that the valuation will likely remain discounted below that of peers pending improved IoT growth (fourth-quarter guidance calls for IoT revenue to be down 5% year-on-year at the mid-point).

BlackBerry is trading at a discounted valuation of 3.0 times NTM Enterprise Value/Sales.

Treiber noted that BlackBerry’s valuation will likely remain discounted, pending strengthening IoT growth and realizing improved profitability. The price target includes the $120 million cash proceeds from the sale of Cylance and values Secure Communications at 6.0 times calendar 2025 Enterprise Value/EBITDA (unchanged) and the IoT business at 6.1 times calendar 2025 Enterprise Value/ Sales (unchanged).

Price Action: BB stock is up 23.5% at $3.679 at last check Friday.

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