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Analyst Insists BlackBerry is Not a Good PE Target

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MKM Partners' Michael Genovese is following suit with seemingly a large portion of the Street's sell-side analysts Tuesday, suggesting BlackBerry (NASDAQ: BBRY) is not a good private-equity candidate.

The analyst noted several concerning fundamental bullet points including Handsets which will likely continue to lose money amid declining volumes and component orders and an expected continuing decline in service sales given the BlackBerry 10 transition.

Genovese does not "expect a deal to get done right away and think the company will likely burn most of the $5 per share cash now on the balance sheet over the next 4-6 quarters. Alternatively, if a deal happens right away we expect the acquirer will use roughly $3 per share in cash shuttering much of the operations. Therefore, we use $2 per share for the cash in our break-up analysis."

Genovese pointed out BlackBerry would not be accretive to either Samsung or Apple, and said Lenovo would likely have a difficult time jumping regulatory hurdles. "Microsoft may be the only company desperate enough to buy BBRY, but we don't see them overpaying for it," according to the MKM analyst.

Despite the sell-sides pessimism for a deal, shares of BlackBerry continue to move higher Tuesday afternoon. The stock last traded at $11.88, up more than 10 percent for the session.

Latest Ratings for BBRY

DateFirmActionFromTo
Sep 2017Bank of AmericaMaintainsUnderperform
Aug 2017Goldman SachsReinstatesSellSell
May 2017Raymond JamesDowngradesOutperformMarket Perform

View More Analyst Ratings for BBRY
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Posted-In: Analyst Color News Analyst Ratings Movers

 

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