BlackBerry Ltd To Continue Acquisitions: Morgan Stanley

BlackBerry Ltd To Continue Acquisitions: Morgan Stanley
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BlackBerry could acquire some more smaller companies going forward, stated Morgan Stanley analysts in a report on Wednesday. The analysts have reiterated their Underweight rating on the Canadian firm with a price target of $7. BlackBerry purchased WatchDox on Tuesday to upgrade its mobile content security.

Huge cash reserves

The report read that there could be even smaller acquisitions in the future as the company is moving forward with its plan of $600 million in software/messaging target through a combination of organic & inorganic activity. The Waterloo, Ontario-based company earned software revenues of around $250mm in FY 2015.

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“We would expect acquisition activity to continue, as the company has stated it is comfortable taking its cash balance down to $2.5bn from $3.2bn ($1.5bn net),” the analysts wrote.

In its fourth quarter earnings call, BlackBerry did mention that for the first time in FY 2016, their messaging/software revenue target of $600 million would be achieved through organic and inorganic means. In line with its objective, the Canadian smartphone maker purchased WatchDox, expecting to generate revenue of around $20 million in 2014.

Morgan Stanley further said the company largely kept the details of the WatchDox acquisition under wraps, but the negotiation price is not as