BlackBerry Ltd BBRY‘s stock has been on fire in 2017, surging 34 percent year to date. But while the company has done a commendable job distancing itself from its legacy smartphone business and building its mobile security business, Bank of America analyst Daniel Bartus says there are still plenty of things to dislike about the stock.

According to Bartus, a sum-of-the-parts valuation of Blackberry’s software business reveals an unattractive valuation. In fact, Bartus listed five reasons Bank of America remains bearish on Blackberry:

1. The company likely won’t return to consistent profitability until 2020.
2. Blackberry’s Enterprise segment should be valued closer to Mobileiron Inc MOBL 8.7% at 1.2x enterprise value per share than more profitable names like Citrix Systems, Inc. CTXS 0.91% and VMware, Inc. VMW 0.8% at more than 4x EV/S.
3. Auto software QNX is a wildcard, but growth will likely be modest and Blackberry is at risk of losing market share.
4. Software/services growth in the most recent quarter was driven by shifting handset-related revenue.
5. A sum-of-the-parts analysis reveals fair market value roughly 17 percent below current market cap.

For Blackberry bulls, Bartus said there is potential for IP-related deals to provide a boost for the stock. In addition, with $1.7 billion in net cash, including cash left over from the QUALCOMM, Inc. QCOM 0.52% settlement, Bartus says Blackberry could choose to bump revenue growth via M&A.

“In our view, BlackBerry’s low growth profile and participation in highly competitive markets pose…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!