Raymond James On Blackberry: 'Only Positives From Here On'

BlackBerry Ltd BBRY has launched the DTEK 50, a $299 all-touch Android device with Blackberry level security.

Raymond James’ Steven Li upgraded the rating on the company from Market Perform to Outperform, while raising the price target from $8.00 to $10.50.

Only Positives

Li believes that it would be “only positives from here on” for BlackBerry, given that the company neither designs nor manufactures the DTEK 50, so it has no liability or balance sheet risk.

One of the possible outcomes, according to the Raymond James report, is that “DTEK shows there is a market for a secured version of Android.” “Now, think of the potential of licensing a “secured version” to Android manufacturers and have their device enterprise ready,” the report added.

The worst case scenario, Li mentioned, would be that DTEK flops and BlackBerry becomes a software-only company, which could actually prove to be a positive.

A Lot To Like

For now, there is “a lot to like,” with recurring revenues of 74 percent in 1Q and guidance for 80 percent for F2017.

Software guidance for F2017 is for growth of 30 percent year on year, while Li believes BlackBerry Software could grow 15 percent organically, with 27 percent EBITDA margins in F2018, growing to 30 percent in F2019.

“There are also a couple of near-term catalysts to boot: Radar (asset tracking, GA later this month) and converts buy back (saves $75mln in interest cost),” Li added.

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