Scotiabank Thinks Long-Term Investors Should 'Take A Look' At BlackBerry

In a report published Thursday, Scotiabank analyst Daniel Chan maintained a Sector Perform rating and price target of $12.50 on

. The company is scheduled to reports its Q1 results on June 23. Although the analyst expects Classic to be successful, the ramp is likely to be slower than anticipated. The analyst also believes that governments and enterprises would need more time to adopt BB10 devices. "Once these organizations adopt BES12, we believe BB10 hardware sales will follow. These enterprise device sales will likely have a much fatter tail. We expect software sales to pick up slightly in Q1 as the EZ Pass program ends at the end of June and as channel partners begin to push BES12," Chan said. According to the Scotiabank report, software revenue growth is likely to accelerate in Q2, following the closure of the EZ Pass program, initial VAS sales and sustained channel support. Hardware revenues are also expected to improve with increased adoption of BES12. "We expect modest gross margin expansion QOQ on improved hardware margins and, combined with improved revenue, drive modest earnings in the quarter and deliver $0.06 in EPS," Chan added, while suggesting that long term investors could consider this stock.