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BlackBerry Shares React Positively To Wells Fargo Note

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In a note release Tuesday morning, Wells Fargo analyst Maynard Um raised his valuation range and estimates for BlackBerry (NASDAQ: BBRY). The revisions come amid meetings with the company's management.

Despite his valuation range going from $8.50 - 9.50 to $9.50 - 10.50 and fiscal year 2015 and 2016 EPS estimates going from -$0.88 and -$.082 to -$0.58 and -$0.27, respectively, Um has maintained a Market Perform rating on the company.

Um said the visibility to "materially more" upside in fiscal 2016 is still limited, due to the number of "moving parts" related to profitability.

Um noted that BlackBerry's management is confident it will meet its target for break-even cash flows by the end of fiscal 2015. Based on meetings with the company's management, Um said BlackBerry has the following "levers" to drive cash flows:

  • New device mix shift towards enterprise
  • Lower acquisition of intangibles
  • Working capital relief from Foxconn deal
  • Ability to lower operating expenditures if need be

Other points Um noted included:

  • BES12 is "vital" and launch is expected to be on time in the fall.
  • More enterprise related revenue, $100 million eBBM
  • The Passport and Classic will be launched in September and November, respectively. These devices deliver a higher margin than the Z3.

Following the note, BlackBerry shares have traded up about one percent in Tuesday's pre-market.

Posted-In: Maynard Um Wells FargoAnalyst Color Price Target Reiteration Analyst Ratings

 

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