BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) released the results from its most recently completed quarter this morning, blowing the lid off of Wall Street’s expectations. The struggling Canadian company reported losses of 11 cents per share, compared to consensus estimates of 25 cents per share in losses. However, it did not fare so well on revenue, posting $966 million, compared to Wall Street’s estimate of $1 billion.

BlackBerry

Why BlackBerry stock surged today

In a report dated today, Evercore analysts Mark McKechnie and Zachary Amsel said they think BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) stock started trading up because of the company’s lower-than-expected operating expenditures and better-than-expected cash balance. They note that BlackBerry’s higher cash balance was because of a tax refund that arrived earlier than expected—during the May quarter rather than the August quarter.

The other reason they think BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares surged is because of positive management commentary about BES 10 licenses. The Evercore team called the company’s turnaround efforts “extraordinary,” noting the 57% decline in operating expenditures and preservation of the company’s balance sheet.

They continue to rate BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) as Underweight with a $6 per share price target. They’re starting to see the bull case for a “smaller but profitable” BlackBerry. However, they also note that the company’s fundamental revenue continues to decline and that competition from “more open solutions” continues to heat up.

Will BBM stabilize BlackBerry?

One of the main areas BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has been focusing its attentions on is its popular messaging app BlackBerry Messenger. Management could be looking to BBM for further growth they try to stabilize the business. They keep rolling out new features and even put it out on iOS and Android phones. However, it seems unclear whether BBM will be enough to save BlackBerry.

BGR notes that BBM’s popularity appears to be slumping, particularly in Western markets. Downloads of the app started strong back in November but then started to decline. BBM is no longer one of the top 50 downloads on the iPhone in the U.K. or even its home country of Canada. Meanwhile rivals continue to move in on BBM, with Canadian competitor Kik grabbing a large segment of the teen market in the U.S. and Viber clawing its way into the top 40 iPhone downloads list.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s messaging app also continues to battle with more popular rivals like WhatsApp, which is the world’s top download. Snapchat, WeChat and LINE are also grabbing market share in Africa and Latin America, putting BBM in danger of losing even key emerging markets.

Would BBM downloads translate into sales?

The big question is whether BBM would drive more sales for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), and it doesn’t look good. BGR notes that while BBM is the top iPhone app in Nigeria and the second most popular app in Indonesia, it doesn’t place high in terms of revenue in those two markets. In Nigeria, BBM is 164th in terms of revenue, while in Indonesia, it’s in 346th place for revenue. In other words, it doesn’t look like the app will drive any significant revenue for BlackBerry.

Of course BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) could keep rolling out features, but at least for now, it is still fighting an uphill battle—one that fewer and fewer analysts think it can win.