BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) managed to surprise in last week’s earnings report, but only because of recent cost cuts. Analysts from Canaccord Genuity and UBS have adjusted their models now and bumped their price targets up just slightly.

BlackBerry

BlackBerry makes progress

In a report dated March 28, 2014, analyst Amitabh Passi of UBS notes that management has been aggressively “right sizing” the company since the second fiscal quarter. Operating expenditures declined from $825 million to $470 million, while inventory declined from $941 million to $244 million. AR fell from about $2 billion to $1.1 billion.

In spite of this work, the analyst says BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s intrinsic value remains questionable. He said there is some optionality in the three core parts of the company, plus its “strong heritage in mobile security.” However, there are still many possible outcomes. The analyst notes that the enterprise mobile management space is still very competitive. In addition, he questions just how much value lies in BlackBerry Messenger and states that the QNX in-car operating system is “too small to meaningfully affect financials today.”

In a report dated March 28, 2014, Canaccord Genuity analysts Michael Walkley and Siddharth Sinha say they’re impressed with the work BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) management has done so far in reducing the company’s costs. However, they say the plans are still in the early stages and that there is “limited near-term sales visibility.”

BlackBerry to keep focusing on devices

Passi also is increasingly concerned about BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s devices strategy. A quarter ago, it seemed like the company was de-emphasizing devices. However, BlackBerry now says that devise remain central to its core strategy. In fact, the company is planning three or more new phones. The UBS team is concerned about whether BlackBerry will be able to profitable in the hardware space because the company lacks scale.

Passi adjusted his estimates up because of lower operating expenditures and higher gross margins. However, he still expects declining sales and non-GAAP losses through the 2015 or 2016 fiscal year. He said BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) needs stability in its services revenue in order for “sales to inflect upwards,” and that isn’t happening. He maintained his Neutral rating on the company and raised his price target from $8 to $8.50 a share.

The Canaccord Genuity team also struggles to see any value in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s devices division. They think in spite of the recent partnership with Foxconn Technology Co., Ltd (TPE:2354) (OTCMKTS:FXFCOF), it’s going to be difficult for BlackBerry to make devices back into a profitable business. They also cite scale as a problem for BlackBerry.

They also expect BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) to keep posting losses through at least the 2015 fiscal year. However, they are expecting “gradually improving trends” after the company launches BES 12 in November. In fact, they believe BlackBerry could even hit break even by the 2016 fiscal year. They maintained their Hold rating on the company but raised their price target to $8 a share.