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CIBC Analyst: BlackBerry Turnaround Has A Ways To Go...It's 'Too Early' To Know If It Will Work


In a report published Wednesday, CIBC analyst Todd Coupland maintained a Sector Underperformer rating on BlackBerry Ltd (NASDAQ: BBRY), with a price target of $6.25, citing the company's weak software sales.

Blackberry's FQ1 results missed expectations. "The headline software revenue, while ahead of expectations, was aided to an undisclosed extent by two patent cross-licensing agreements," analyst Todd Coupland said.

The company's underlying software business is estimated to have grown around 20 percent, significantly short of the CIBC estimate of 70 percent y/y growth. Services revenue shrunk by 16 percent, a rate faster than the CIBC estimate of 11 percent.

Coupland pointed out that these results do not bode well for either the company's share price or a turnaround story.

In the report CIBC noted, "Blackberry's turnaround still has a ways to go. It is too early to determine if its plan (software for service) can be successful. The services to software gap is the issue."

Coupland expects the company to report a loss of about $767MM in high margin service revenue in FY16. "This compares to only a ~$250MM increase in software Enterprise Device Management (EDM) sales and support."

Posted-In: CIBCAnalyst Color Reiteration Analyst Ratings


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