BlackBerry Ltd To Have ‘Rocky Road To Recovery’: Nomura

BlackBerry Ltd To Have ‘Rocky Road To Recovery’: Nomura
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BlackBerry has a “rocky road to recovery,” according to Nomura analyst Stuart Jeffrey, who maintained his Neutral rating on the stock but slashed his price target from $10.60 to $10.30 per share in a research note on Monday.

Forecasting the impact not easy

Jeffrey said he needs more reasons to be positive on the stock. The analyst noted the major factors to focus around the stock are: improving earnings and launch of the new product platform and transformation of the company from a struggling handset vendor to a pulsating supplier of enterprise mobility management solutions. The analyst believes BlackBerry can earn good revenues on the back of this recovery in the next 12 months.

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“Near-term estimates continue to miss expectations, making it hard to confidently project a bottoming out in revenue trends,” noted analyst.

The recently launched platforms from the Canadian smartphone maker, which are expected to drive future software revenues, are still immature, therefore, it is difficult to forecast their impact, notes Jeffery. He added, “[We] need to see a marked acceleration in the market-wide adoption of enterprise mobility management solutions to justify significant upside in fair value.”

There could be a possibility of such a trend beginning, but the numbers are still low and the timing or scale of the material uptick, which is supposed to fuel the stock up, is still difficult to forecast, said Jeffery.

Analysts bearish on BlackBerry

In a separate report on Monday, JP Morgan analysts slashed their price on BlackBerry from C$13 to C$10 per share. They have assigned a Neutral rating on the stock. Also Morgan Stanley analysts, in a research note on Monday, gave a price target of $7 to the Canadian firm with a Sell rating.

BlackBerry reported its latest earnings last week, posting adjusted earnings of 1 cent per share on revenue of $793 million against the consensus estimate of a loss of 5 cents a share on $936 million in revenue. Last year in the same quarter, the company posted revenue of $1.19 billion. Revenue from hardware accounted for 46%, while services contributed 46% and 8% came from software and other revenues.

Region-wise, around $213 million or 26.9% of the revenue came from North America, 46.1% came from Europe, the Middle East, and Africa, 10.6% came from Latin America, and 16.4% came from the Asia-Pacific region.

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