BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is scheduled to hold its Analyst Day today, and a positive tone is generally expected. However, the struggling Canadian company isn’t out of the woods yet. UBS analysts will be looking for signs of stabilization and updates on the company’s financial targets.
What to expect at BlackBerry’s Analyst Day
In their report dated Nov. 12, 2014, analysts Arvind Bhatia and Brett Strauser said they expect BlackBerry management to remain upbeat on the business. They believe the company will unveil BES12, its newest platform software, and provide more details on their roadmap for upcoming devices, as well as their strategy to bring those devices to market.
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Additionally, they think BlackBerry will reveal its BES 12 service provider partners and offer an update on the traction they are seeing with the EZPass program. Additionally, they want to see more visibility on the potential for monetization of BlackBerry’s services, software and BlackBerry Messenger. Other details they expect to hear include targets for the company’s business model and updates on any current and planned partnerships.
Any future for BlackBerry?
The UBS team said they are seeing signs that BlackBerry is stabilizing under CEO John Chen. However, they say it’s still unclear how the company will be able to execute a “sustainable turnaround” and what the “end state” of the company might look like.
They point out that BlackBerry remains in a very competitive environment, going up against the likes of International Business Machines Corp. (NYSE:IBM), VMware, Inc. (NYSE:VMW) and others. They say the company still has a big barrier in trying to turn around its devices division.
They also point out that it’s still just too early to gauge how much success the company will have in monetizing BlackBerry Messenger and its transformation into a cross-platform messaging service.
Updates on BlackBerry’s financial targets
The UBS analysts think BlackBerry will be able to achieve $500 million in software revenues—if a high percentage of EZPass participants start paying maintenance fees in February. The company would also need about .5 million new subscribers to be added per quarter. However, they expect services revenues to fall by between 10% and 15% each quarter until they reach about $550 million by the 2017 fiscal year.
At today’s Analyst day, the analysts will focus on whether BlackBerry management updates their financial metrics, including the timing of their expectation to hit breakeven cash flow and become profitable. They will also look for updates on cash use for intangibles and capital expenditures, as well as operating expenditures requirements, gross margins for the devices division, and upside in licensing and value-added services revenues.
They maintained their Neutral rating and $9.50 per share price target on BlackBerry heading into today’s event.