Morgan Stanley upgraded its stock rating for BlackBerry from Underweight to Equal-Weight on Tuesday. The bank maintained its 12-month price target of $7 for the shares of the Canadian technology company.
The stock price of BlackBerry increased more than 7% to $7.80 per share driven by the stock rating upgrade.
At this year's Sohn Investment Conference, Dan Sundheim, the founder and CIO of D1 Capital Partners, spoke with John Collison, the co-founder of Stripe. Q1 2021 hedge fund letters, conferences and more D1 manages $20 billion. Of this, $10 billion is invested in fast-growing private businesses such as Stripe. Stripe is currently valued at around Read More
BlackBerry has opportunity to create value
In a note to investors, Morgan Stanley analysts James Faucette said BlackBerry could create value because of its cash flexibility.
“While there is no evidence of a fundamental business turnaround, BlackBerry has flexibility with cash and opportunity for op-ex cuts that create value. The company still has a significant opportunity to add to that cash balance through headcount reductions or other reallocation of resources,” according to Faucette.
Last week, BlackBerry eliminated some jobs to transfer resources to its software/security businesses. In a recent interview with Fox Business Network’s Maria Bartiromo, the company’s CEO John Chen said, “We are reducing jobs, but it is not so much as reducing.” He clarified that the action was “more of a shifting of resources in portfolio.”
BlackBerry made several acquisitions to improve its software and security businesses including AtHoc, Secure Voice, and WatchDox. Chen said the company spent $100 million a year to improve its security.
BlackBerry unlikely to achieve Chen’s revenue target from software business
Chen aims to generate $500 million in revenue from BlackBerry’s software business and $100 million from its messaging business.
Faucette believed that it was still unlikely for the company to achieve Chen’s revenue targets. He suggested that the company could generate $400 million from its software business.
During the interview with Bartiromo, Chen said people are investing in the shares of BlackBerry because they see that the company generates values. He added, “We’re specialty in something that you could generate a better value for the company.”
Chen also requested investors to be patient with BlackBerry’s turnaround. He said, “I know there’s a lot of impatience out there right now, if you look at our stock price, you know it’s very impatient. People need to be patient. It’s the right thing. It’s the right market.”
Kahn Brothers Group increased its stake in BlackBerry during the second quarter based on its 13F filing. The investment advisor bought additional 943,149 shares of the Canadian technology company.