Wells Fargo Securities Feels Confident About BlackBerry's Plans Following Meeting with CFO

In a report published Wednesday, Wells Fargo Securities analyst Maynard Um reiterated a Market Perform rating on

. In the report, Wells Fargo Securities noted, “We recently met with BBRY CFO, James Yersh, and came away with the sense that it has a clear strategic direction and a methodical plan to get there. On the positive side, there are some accounting mechanisms that should help FY2016 CF--improving working capital from shift away from hardware, lower acq of intangibles from ending royalty prepayments, and lower operating expense (opex) potential. However, we believe BBRY is still in a transition period with the new sales forces not yet fully in place, pricing models still being solidified, and product improvements still on the come. While we expect early acceptance from companies that need greater security, we would like to see 1) sales foundation and pricing models more firmly in place, 2) more concrete end demand evidence (not driven by pricing), and 3) some visibility to hardware to software-centric business model transition. After a more careful scrub, FQ4 EPS go to -$0.43 from -$0.42 on slightly lower service GM but FY2015 revenue/EPS move to $3.9B/-$1.18 from $3.78B/-$1.32 [Street: $4.24B/-$1.35] on less aggressive churn and lower opex. We raise our range to $9.50-10.50 (from $8-9) based on 0.9x EV/sales given potential cash flow tailwinds (metric we think shares trade on) and potential for further opex cuts (we note we do not embed material increases in software revenue) but maintain Market Perform due to limited end demand visibility.” BlackBerry closed on Tuesday at $9.80.