BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s latest earnings report demonstrated mixed results, and analysts remain understandably cautious. However, the struggling Canadian smartphone maker has earned at least one price target increase—from analysts at BMO Capital Markets.

BlackBerry Ltd Price Target Increased: BMO

BlackBerry reports better gross margins

In a report dated Sept. 28, 2014, analyst Tim Long and his team point out that better gross margins in hardware drove the stronger-than-expected earnings. Cuts in operating expenditures also boosted earnings, although declining services revenue partially offset those upsides.

The BMO team notes that outsourcing and reducing fixed costs helped BlackBerry management beat earnings estimates. They remain concerned about falling services, however, noting that they continue to weigh on the company’s overall results.

BlackBerry’s earnings are neutral to positive

The analysts say that BlackBerry’s hardware business is certainly heading in the right direction. It is still too early to see how the company’s next set of smartphones is going to do though. The square-shaped Passport directly targets enterprise users, but the company just unveiled it.

As a result, it will take a few more quarters to see whether it ends up being a hit. They’re expecting hardware volumes to remain flat over the next year, which would be an improvement from recent declines. The BMO team adds that while hardware margins improved, there isn’t much room for further improvement.

Another positive they saw in BlackBerry’s report was the company’s “safe” cash position. They note that it has stabilized now at $36 million in normalized cash use, compared to $255 million in the previous quarter.

Management remains optimistic on BBM, BES

BlackBerry management continues to see solid monetization prospects for BlackBerry Messenger and BlackBerry Enterprise Server. They’re targeting $350 million in incremental revenues in the 2016 fiscal year for the two segments.

BMO analysts remain conservative on both BBM and BBS because they’re waiting for solid evidence that management can deliver these numbers. They’re biggest concern right now is the falling service sales because they don’t think BlackBerry’s hardware or software segments will grow fast enough to offset the lost service revenues in the next couple of years.

BlackBerry price target increased

They continue to value BlackBerry based on a sum of the parts. Their new price target is $10 a share, which is up from their previous target of $9 per share. They continue to rate the company’s stock at Market Perform.

The BMO team values BlackBerry’s net cash at the end of the 2015 fiscal year at $3 per share. They value the company’s intellectual property and other intangibles at $1.90 per share and BlackBerry’s network / NOC segment at $1.40 per share. BBM gets a value of $2.80 per share, while QNX is valued at 80 cents a share and the Enterprise Software business is valued at $1.20 per share. They have assigned a -80 cent per share value on BlackBerry’s Devices business.