Buy BB or MG stock as BlackBerry and Magna team up for ADAS?

Highlights

• BlackBerry (TSX: BB) and Magna (TSX: MG) have announced plans to collaborate for integrated Advanced Driver Assistance Systems (ADAS).
• BlackBerry is targeting total revenue of approximately US$ 655 million in fiscal 2025.
• MG stock plummeted by nearly 32 per cent in a year.

BlackBerry Limited (TSX: BB) and Magna International Inc (TSX: MG) announced their plans to collaborate for integrated Advanced Driver Assistance Systems (ADAS) on Wednesday, May 18. The two players have agreed on a multi-year agreement.

According to this agreement, BlackBerry will provide its QNX products and professional engineering services to Magna International for safety, ADAS, system integration, performance optimization and solution validation. The mid-cap cybersecurity firm is also expected to benefit from the EV player's ADAS expertise and 'unique' ability to integrate system solutions into vehicle applications.

Both parties believe that the global ADAS market is expected to see significant growth in the next decade, with Original Equipment Manufacturers (OEMs) launching vehicles with extended features.

So, let us look at these two TSX stocks as they team up for ADAS solutions.

BlackBerry Limited (TSX: BB)

BlackBerry announced its financial targets on May 18 as well. The TSX software firm said it is targeting total revenue of approximately US$ 655 million in fiscal 2025.

The company anticipates its IoT and cybersecurity revenue to reach around US$ 307 and US$ 579 million, respectively, in FY2025. These revenue expectations exclude potential revenues from BlackBerry IVYTM and revenue from licensing etc.

BlackBerry saw its net profit spike to US$ 144 million in Q4 FY2022 compared to a negative balance of US$ 315 million in Q4 FY2021. The cybersecurity firm's price-to-earnings (P/E) ratio was 207.4, signifying high growth expectations in the market.

However, BB stock slipped by over 28 per cent year-over-year (YoY). As per Refinitiv findings, BB's Relative Strength Index (RSI) value stood at 49.75 on May 19, which indicates a neutral position. Generally, when the RSI value is above 70, it implies that the stock is on a bull run and vice versa when it's less than 30.

Also read: Enthusiast Gaming: Does 57% revenue jump make EGLX stock a smart buy?

Magna International Inc (TSX: MG)

Magna International revealed that its ADAS recently launched on the 2022 Toyota Tundra, providing 3D benefits and a surround-view. With its integrated ADAS solutions, the TSX mobility giant is helping global auto manufacturers improve safety, comfort and convenience.

Magna International's debt-to-equity (D/E) ratio of 0.45 tells that it primarily finances from equity. MG stock plummeted by nearly 32 per cent in a year and held an RSI value of 52.61 on May 19, according to Refinitiv.

Also read: MFC, CIX, SLF: TSX non-bank financial stocks to beat rising inflation

Bottomline

BlackBerry and Magna International can benefit from this collaboration with the global ADAS market growth they expect in the future. Looking at their current prices, BB and MG stocks are trading nearly 69 per cent and about 37 per cent down, respectively, from their 52-week highs. Investors ready to be patient enough to reap gains from these stocks, in the long run, can explore them.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.