BlackBerry’s performance can be tagged as laudable from an operational expenditure point of view even though revenue fell in the fourth quarter of fiscal 2015, according to UBS analyst Amitabh Passi. In a report released on Sunday, Passi assigned a Neutral rating to the stock with a 12-month price target of $10. The consensus 12-month target for BlackBerry is $9.22 per share.

BlackBerry Ltd Assigned 'Neutral' Rating By UBS

Software sales showing revival signs

According to Passi, revenue at Blackberry continued to show a downward trend with a drop of 32% year over year in the 4QFY15 against the 34% decline in the 3QFY15 and 64% drop in the 4QFY14. Passi mentioned in a note on Sunday that the company posted an operating profit of $2 million during the quarter in the wake of operational expenditure rationalization efforts taken by the Canadian company.

Also software sales showed significance signs of revival in the fourth quarter, rising to $67 million from $56 in the corresponding quarter last year, but BlackBerry has still a long way away to reach its software sales goal of $600 million, believes the analyst. Passi noted that there are only a few takers of the company’s newly launched interface, BlackBerry Enterprise Software 12 (BES12), and BlackBerry value-added services.

Cautiously optimistic on BlackBerry

The UBS analyst is, however, keeping a close but skeptical watch on the company, taking note of its cost-cutting strategy and cash flow generation capabilities. Investors do not have clarity about the company’s ability to hit its target, even when cost-cutting and cash flows are acting as crucial supports for BlackBerry’s business as of now.

The cash flow of the company has remained stable on the back of operational profit generation of $210 million in the fourth quarter. BlackBerry now stands a chance to initiate more acquisitions and also achieve its $600 million software sales goal, says a report from Bidness Etc. The Canadian smartphone maker has scaled down its purchase order commitments to contract manufacturers from $565 million in the 4QFY14 to $394 million in the 4QFY15. This will bring down the inventory risk for BlackBerry, says the report.

On Tuesday, BlackBerry shares closed up 1.48%, while year to date, the stock is down by almost 19%.