Stock Market

No matter what business it’s been in — smartphones, enterprise software, messaging or embedded automotive software — BlackBerry Ltd. (NYSE:BB) has worked hard to craft an identity around security. However, BB stock was in the headlines on Tuesday when it was announced that a security flaw had been found in its QNX software.

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Even worse, BlackBerry had apparently sat on the news for months. After it was pressured by the U.S. Food and Drug Administration (FDA) and the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA), the company decided to come clean. Then on Wednesday, BB stock popped.

What’s going on there? You would think any threat to BlackBerry’s security credentials would be bad news for BB stock. Not telling customers that their products were at risk to the point that the FDA and CISA have to step in is even worse. It was a scandal in the making.

However, in this case the market seems more focused on the fact that the QNX vulnerability has not been exploited. So far, BlackBerry’s security credibility remains intact. In fact, BB stock even got an analyst upgrade today. Here’s the full story of what’s going on.

BlackBerry Busted for Sitting on QNX Vulnerability

On Aug. 17, BlackBerry issued a press release announcing the discovery of a vulnerability in its QNX software.

Most people, other than the engineers involved in systems running QNX, would probably have never taken notice. 

Unfortunately, reports soon surfaced that BlackBerry had known about the issue for months. The vulnerability could have allowed cybercriminals to attack vehicles and medical devices running older versions of QNX.

According to the reports, the company had refused to alert customers about the issue, choosing instead to keep it secret. It wasn’t until the FDA and CISA put pressure on BlackBerry and issued advisories of their own that the company came clean. 

BlackBerry’s actions (or lack thereof) turned a security issue into headlines and a potential scandal.

In its announcement, BlackBerry stated that it is unaware of any exploitation of the the vulnerability. CISA also noted in its advisory that the agency “is not aware of active exploitation of this vulnerability.”

Additionally, BlackBerry says software patches are available to update the affected versions of QNX software.

The combination of no known attacks plus patches being available to neutralize the vulnerability seems to have done the trick for BB stock. Instead of taking a hit from the news, it popped on Wednesday, gaining around 5%.

BB Stock Got an Analyst Upgrade

BlackBerry also received a welcome analyst upgrade on Wednesday. Canaccord Genuity analyst Michael Walkley upgraded BB stock from “sell” to “hold” while sticking with his $10 price target.

That’s not exactly an overwhelming endorsement, and his price target actually has almost no upside compared to the current value of BlackBerry shares. But it’s a more optimistic take than many investment analysts are offering.  

Does BlackBerry deserve a place in your portfolio? This stock rates a “B” in Portfolio Grader. It certainly has potential, but it’s also been all over the place in 2021. A big part of that is the fact that BlackBerry has become a meme stock — a guarantee of volatility.

Its latest quarter was a disappointment. Then there was this week’s QNX vulnerability scare. Everything’s good on that front, but it’s a reminder that as a company that has staked its identity on security, BB stock could just as easily have been savaged by what happened.

Despite the drama of 2021, BB stock is up around 42.5% since the start of the year. With QNX now embedded in more than 195 million vehicles globally, BlackBerry has an established and growing royalty stream.

While QNX has been in the spotlight, the company continues to push its enterprise and IoT security products. It’s also collect licensing revenue from the people who still want to buy Android smartphones with physical keyboards and the BlackBerry logo on them.

It’s volatile, it can be risky and for the most part analysts don’t love it. But BB stock also offers long-term growth potential.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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