UBS US reserach analysts Brent Thill, Amitabh Passi, Steven Milunovich and Stephen Chin maintain neutral ratings for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).

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blackberry Ltd. BBRY BB

We maintain our Neutral rating on BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), as the implied valuation for the enterprise is now less than $1bn. The company remains in a tough competitive situation, but at current levels, cash and other assets provide some downside support to the shares. Our $10 price target is based on a sum-of-the-parts valuation.

Upside scenario for BlackBerry

Our upside valuation of $11 assumes incremental value assigned to the prospects for mobile device management (MDM), assuming Blackberry MDM serves 10m devices at $3 per month average revenue per user and an EV/sales multiple of 3x applied to this revenue stream. To this, we also add the net asset value of the enterprise.

Downside scenario for BlackBerry

We assume liquidation value of close to $6 per share as our downside valuation to shares, assuming cash/equivalents of only $1bn and a small haircut applied to inventory and accounts receivable.

BlackBerry’s upcoming catalysts

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) reports quarterly results in February, May, August, and November. The company also participates in industry tradeshows, as well as various sell-side investor conferences.

Business description

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) designs, produces, and markets wireless solutions and platforms for seamless wireless access to time-sensitive information, including email, phone, SMS messaging, personal organizers, and Internet-based applications. The company’s primary revenue source is the BlackBerry wireless solution that comprises BlackBerry smartphones, software, and services.

Industry outlook

The smartphone industry remains highly competitive, with reasonable growth, although we continue to expect some saturation at the high end. We expect margins, which remain at relatively elevated levels for the industry, to subside from current levels. We foresee only two, or perhaps three, mobile platforms to be the most relevant in the industry.