BlackBerry (BBRY) PT Cut to $8.80 at Goldman Sachs

March 31, 2014 8:33 AM EDT
Get Alerts BBRY Hot Sheet
Price: $7.21 +0.70%

Rating Summary:
    7 Buy, 39 Hold, 16 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 22 | New: 54
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Goldman Sachs maintained a Neutral rating on BlackBerry (NASDAQ: BBRY) and trimmed its price target to $8.80 (from $9.50). Analyst Simona Jankowski called the company's Q4 "mixed."

"BlackBerry beat consensus EPS estimates by a wide margin on aggressive cost cutting, with gross margin of 43% well ahead of consensus at 35% (GS at 40%), and opex of $577mn was well below consensus of ~$800mn (GS at $688mn). However, despite the narrower losses, BlackBerry burned more cash than expected as a result of working capital use, with cash and equivalents ending at $2.7bn, below our estimate of $3.0bn. BlackBerry remains committed to achieving free cash flow breakeven by the end of FY15 (Feb), and said it expects to return the Hardware segment to breakeven operating margins next year," said Jankowski.

"While we see the year end cash flow breakeven target as achievable given the deep cost cuts, we are more skeptical on BlackBerry's ability to return to profitability in FY16, given the challenges in gaining traction with its smartphones or enterprise services. We look for evidence of traction with the upcoming Z3 (expected to launch in April for emerging markets), as well as the BlackBerry Classic (QWERTY device expected in 4Q) and upcoming BES12 software (in Oct/Nov). We raise our FY15/16 EPS to ($0.86)/($0.97) from ($1.20)/($1.02) on higher margins, more than offsetting lower revenues," added the analyst.

For an analyst ratings summary and ratings history on BlackBerry click here. For more ratings news on BlackBerry click here.

Shares of BlackBerry closed at $8.41 yesterday.

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