UPDATE: Paradigm Capital Downgrades BlackBerry Following Disappointing Q2 FY14 Results
In a report published Monday, Paradigm Capital analyst Gabriel Leung downgraded the rating on BlackBerry Ltd. (NASDAQ: BBRY) from Speculative Buy to Hold, and lowered the price target from $15.00 to $10.50.
In the report, Paradigm Capital noted, “BlackBerry announces much lower‐than‐expected preliminary Q2 FY14 results...Clearly, these are very disappointing results. Despite the company's comments around increased BES 10 penetration, we believe its deteriorating financial position could prompt enterprises to delay adoption of BB10 devices, which could further exacerbate the decline in BlackBerry's financial situation. As such, we believe there is an even greater sense of urgency to find a strategic buyer, which could result in a quick sale of the company (with the ball being in the buyer's court).Using a sum‐of‐parts(see table 1), including a value for cash, patents and enterprise customers), we arrive at a revised target price of $10.50 (was $15.00). Although we believe we are close to an end‐game takeout scenario, given the modest return relative to the inherent risk in this investment (i.e. as a standalone entity), we are downgrading the stock to Hold (was Spec. Buy). We are refraining from adjusting our estimates pending the release of the full results on September 27th.”
BlackBerry Ltd. closed on Friday at $8.73.
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