In a report published Wednesday, Credit Suisse analyst Kulbinder Garcha maintained an Underperform rating on BlackBerry with a price target of $6, after the company reported disappointing results.
“We continue to have reservations on their ability to ramp up software and operate more competitively, and expect the company to burn cash,” analyst Kulbinder Garcha said.
The adjusted EPS estimates for FY16 and FY17 have been reduced from -$0.17 to -$0.24 and from -$0.19 to -$0.29, respectively.
Although the company’s software revenues appeared “solid,” Garcha expressed concern regarding the results being boosted by licensing revenues, which could be “partly one time in nature” as well as M&A to some degree.
In the report Credit Suisse noted,
“Services continued to see an accelerated decline, falling at 19% q/q. We continue to see headaches for the Services.”
“Given the inherent challenges in turning around the services stream, as well as subscale loss making hardware business, we believe it would be best for the company to break up. Assuming shutting down the hardware business by the end of FY16 and winding down services business by the end of FY17, we arrive at NAV of $3.2bn ($6 per share), which suggests an approximate 30% downside from the current market price,”.
Separately, stock price target was lowered to $8 from $10 by analysts at Canaccord Genuity who maintained their “hold” rating.
In Wednesday’s pre-market trading, shares are falling 0.68% to $8.83.
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