BlackBerry Ltd Price Target Raised After Results

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BlackBerry Ltd Price Target Raised After Results
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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) released its latest earnings report earlier this week, posting losses that weren’t as bad as expected. Analysts are starting to weigh in on those results, and while many still don’t see much of a future for the company, a few firms have raised their price targets.

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BlackBerry makes progress

In one report dated June 19, 2014, RBC Capital Markets analysts Mark Sue, Paul Treiber and Ameet Prabhu increased their price target from $11 to $12 per share. They maintained their Sector Perform rating on the company. They believe BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is actually making some progress in its turnaround efforts. They actually think the company’s target for breakeven cash flow is “within reach.”

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They note that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s declines in service revenues are slowing down and that the company’s handset division is almost profitable. Also the company’s channel inventory is declining, and there appears to be solid uptake of BES 10 and the upcoming BES 12, as 10% of the 1.2 million licenses BlackBerry has distributed came from competitors’ licenses that were traded in.

BlackBerry’s cash flow, inventory, hardware look better

According to the RBC Capital team, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) could see a bit of a cash flow headwind in the second half of the current calendar year. The analysts cite the upcoming new handsets, which are the Passport and the Classic.

The company’s service revenue fell 10% quarter over quarter, which was a little better than their estimate of 13%. The analysts believe the lower decline in this segment is due to upselling from newer value-add services like premium enterprise services. They also say subscriber attrition appears to be slowing down.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) has begun the next hardware cycle and reported a 23% quarter over quarter increase in handset sales, which rose to 1.6 million. The company launched the Z3 handset during the quarter.

BBM, QNX show promise

The RBC team also noted that BBM and QNX are still in their early stages but called them “enticing.” BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) reported 85 million monthly active users of BBM and a total of 160 million users. The company expects to see its monthly active users for the messaging app to hit 100 million by the end of this year, thanks to the app’s launch on Windows phone and the pre-loading of it on the Lumia handsets. BlackBerry management expects BBM to generate $100 million in revenue during the 2016 fiscal year, mainly because of the launch of BBM Protected, which is targeted at enterprise customers.

Although the company did not say how much revenue it got from QNX, it did say it expects growth there to continue thanks to “new design wins” in the automotive segment and also new verticals like healthcare. The RBC team notes that royalty revenue from QNX comes with high margins, which could give BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s profitability a boost over time.

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Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@valuewalk.com.
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28 COMMENTS

  1. What?? Blackberry didn’t say how much QNX made for the company, that leads me to believe very little or none, maybe enough to pay wages of that department. I am not pleased in how BlackBerry is being run, and not happy to be losing a once great Canadian Tech company. The changing of the name was a mistake and I think Chen Knows it. RIM stood for something great. Mr.John Chen, please change it back, I know you want too

  2. Dave, google “I drink your milkshake”, you have to watch the video. Daniel represents all the hard working employees and investors you’ve harmed with your slanderous and relentless campaign against them. Given the very obvious turnaround I hope you’re not shorting their stock anymore. All in good fun my friend.

  3. LOL…I actually rather enjoy coming on these discussion boards to see people make fun of Dave/Devv and the other trolls. He’s such a clown! Keep it up Sam, BJ!

  4. Nice how the author from the start shows his bias using words such as “actually”…guess its no secrete the author has never used a new BB10 device or has any idea what the MDM subscription numbers are that drive the numbers that BB is reporting. Such a waste of an article…but sure liking the current $9.85 / share USD and over 30% gain in just two days! I’m pretty happy with how Chen’s managing things over a BB. Keep up the good work BB!

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