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Accounting Rules Could Drive Gross Margins for BlackBerry

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On Tuesday, Wells Fargo released some neutral comments on BlackBerry (NASDAQ: BBRY).

Analyst Maynard Um believes accounting methods will “drive gross margins up (combined with lower hardware mix).” Accounting rules “will allow recognition of the perpetual license upfront (vs amortized over a year),” Maynard said.

“Combined with our expectation for a lower opex announcement and cash flow tailwinds, this could drive FY2015 EPS,” the Wells Fargo analyst said.

Maynard remains cautious because of:

  • Pace of subscriber churn.
  • Risk of regulated industries adopting alternative solutions to BlackBerry (White House for example).
  • Potential pause ahead of BES 12 and Q20 releases.

The analyst has a Market Weight rating on the stock.

Shares of BlackBerry 0.27 percent to $9.40 in pre-market trading. Shares are up 26 percent year to date.

Latest Ratings for BBRY

DateFirmActionFromTo
Nov 2014Morgan StanleyDowngradesEqual-weightUnderweight
Nov 2014Cormark SecuritiesUpgradesMarket PerformSpeculative Buy
Oct 2014Imperial CapitalInitiates Coverage onInline

View More Analyst Ratings for BBRY
View the Latest Analyst Ratings

Posted-In: Maynard Um Wells FargoAnalyst Color Analyst Ratings Tech

 

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