As I wrote on Sept. 10, Blackberry (NYSE:BB) has passed a milestone that is likely to push BB stock much higher. On Sept. 22, Blackberry announced that its quarter ending Aug. 31 produced very good results.

Since then, Blackberry stock has risen 20.6% from $9.37 per share on Sept. 21 to $11.30 as of Oct. 21. In fact, since BB stock reached a bottom this year on May 13 at $7.94, it is now up 42.3% as of yesterday.

But this may not be the end of its uptick. Based on my calculations, BB stock could be worth up to 34.7% more at $15.22 within two years.

Where Things Stand For BB Stock

The reason BB stock could rise so much is that Blackberry produced both positive operating cash flow and positive free cash flow (FCF) during its fiscal second quarter.

Both its cyber security division and its licensing division produced excellent revenue this past quarter. The former produced $120 million in revenue, and the latter saw sales of $15 million.

As a result, the company produced a positive operating cash flow of $12 million. Moreover, compared to last quarter, its FCF in Q2 was positive $13 million. This can be seen in the company’s Q2 Cash Flow Statement for the first six months. The report shows that FCF was negative $22 million compared to negative $35 million in Q1.

Therefore, the difference is positive $13 million. This works out to 7.4% of its $175 million in revenue for the quarter. We can use this to estimate the value of BB stock going forward.

What Blackberry Stock Could Be Worth

Analysts now estimate that revenue will rise 21.5% between this fiscal year and next fiscal year, ending February 2023, to $882 million. Now if we assume that its FCF margin rises to at least 10% (up from 7.4% today), its FCF could hit $88.2 million.

I suspect that the FCF margin will actually be much higher by then. For example, in Q4 2020, BlackBerry reported an FCF of $49 million. This was a 23.33% margin of its $210 million in revenue for the quarter. So, you can see that my estimate of a 10% FCF margin for the year ending Feb. 2023 is very conservative.

Now, if we take a 1% FCF yield and apply this to the $88.2 million FCF estimate, we get an implied $8.82 billion target market value. I believe the market will eventually give BB stock a 1% FCF yield given its consistent profitability and sales growth prospects.

This means Blackberry has a target market value that is 34.7% higher than its $6.55 billion market value as of today, according to Seeking Alpha.

Therefore, BB stock has a 34.7% upside from yesterday’s price of $11.30, or $15.22 per share.

What to Do With BB Stock Today

Analysts are not very enthusiastic about Blackberry. Seven analysts surveyed by Refinitiv (as reported by Yahoo! Finance) have an average target price of $8.29. That implies a potential drop of 26.6% from yesterday’s price.

Another survey by TipRanks says that five analysts have an average price of $9.25, or 18% below yesterday’s price. However, nine Wall Street analysts surveyed by Seeking Alpha have an average target of $8.13, or 28% below its Oct. 21 price.

The average of all three of these surveys is a price of $8.56, which is 24% lower than yesterday’s price of $11.30. This pessimism is not likely to last, especially once Blackberry has a full year of positive free cash flow. Analysts often raise their price targets after positive numbers and after a sustained stock price rise.

Last month I wrote that BB stock was worth $13.95. Given the company’s positive numbers this quarter, in terms of its free cash flow, I am raising that target to $15.22.

I must be out of step with Wall Street when it comes to Blackberry. But so far I’ve been correct, since the stock has been rising. There is every reason to believe that BB stock will continue to do so now that it’s generating positive free cash flow.

On the date of publication, Mark R. Hake did not hold any positions (either directly or indirectly) in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.