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Analysts Seem Skeptical Following News Of BlackBerry's Strategic Review


Shares of BlackBerry (NASDAQ: BBRY) are being bid up more than five percent Monday afternoon following news out of the company it is looking for strategic alternatives.

While the Street is clearly liking the news, sell-side analysts seem a little apprehensive.

  • Wells Fargo's Maynard Um reiterated a Market Perform rating and said BlackBerry shares are currently trading around a similar level as other tech companies which have chosen to consider alternatives. He noted the company's strategic review last year, but said "there might a greater urgency this time around given the launch of new BB10 devices is in the rear view."
  • Nomura's Stuart Jeffrey pointed out the news opens the door for BlackBerry to go private, but warned the issues the company has faced in executing a turnaround make it hard to predict a possible suitor. He believes any potential bidder would have to be an expert at turnarounds. Jeffrey suggested a buyout in the $12-15 per share range would be appropriate if BlackBerry could restructuring operations using around $1 billion.
  • Raymond James Steven Li placed the range for a possible deal between $10.50 and $14 per share. The $10.50/share assumption accounts for no EBITDA growth, while a return to EBITDA growth would make a $14/share bid an option.
  • BMO Capital's Tim Long said although the implications of the news will likely push BlackBerry shares higher over the near term, he does not see many possibilities where a structure change will improve the company's stance within the smartphone market. Long could not come up with a scenario where the value of BlackBerry would be increased "significantly" through the exploration of alternatives.
  • Hudson Square Research's Daniel Ernst upgraded the stock from Sell to Hold.

About mid way through Monday's trading session, around 43 million shares of BlackBerry have traded hands. The stock has almost doubled its average daily volume of about 24 million shares.

Posted-In: BMO Capital Daniel Ernst Hudson Square Research Maynard Um NomuraAnalyst Color Analyst Ratings Movers


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