UPDATE: Citigroup Assumes Coverage on BlackBerry, Downgrades on Continued Challenges

In a report published Wednesday, Citigroup analyst Ehud Gelblum assumed coverage on

, downgraded the rating from Neutral to Sell, and lowered the price target from $7.00 to $4.00. In the report, Citigroup noted, “We are assuming coverage of Blackberry with a Sell/High Risk rating and a sum-of-parts price target of $4/share as we believe that Blackberry remains challenged as a going concern and continues to be worth more in a breakup scenario, a strategy that current management does not appear to be following. Oddly enough, we calculate that simply shutting down the business is also not likely to add value as we estimate complete separation/shut-down costs could approach $1B in restructuring while purchase commitments add another $2.9B, let alone some $200M for operating leases, which in total exceeds the company's cash balance of $2.6B as of the August quarter plus the recent $1.0B Fairfax investment via convertible debt, and may require substantial re-negotiating of agreements with existing manufacturers.” BlackBerry Ltd. closed on Tuesday at $5.97.