BlackBerry (BBRY) Long Term Prospects Dim Despite Possible Q1 Strength

June 17, 2013 7:56 AM EDT Send to a Friend
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Deutsche Bank today maintained a Hold rating on BlackBerry (NASDAQ: BBRY) with a price target of $8.00. Blackberry reports Q1 earnings on June 28th, and analyst Brian Modoff thinks Blackberry could surprise to the upside. However, Modoff is increasingly concerned about the company's long term prospects.

"Many investors will be focused on BB10 units, given its recent launch and the company's viability directly related to its success or failure. We have done a number of checks since the launch of the platform, and the results have largely been mixed, if not slightly worse," he said. "However, we feel that the company could have done well in a few geographies and that could help them surprise with a strong BB10 unit number. Moreover, the long tail of service revenues could hold up better than expected, further cushioning margins," said Modoff.

Deutsche Bank expressed caution about Blackberry growth in emerging markets. Specifically, analysts are worried about the Q5, an inexpressive version of the Q10.

"We think there could be challenges here with app development and BOM cost. Given the screen ratio difference between the Q10/5 and that of the Z10, app developers will need to tweak existing BB10 apps in order for them to be included on these handsets. Additionally, it is our belief that the BB10 platform requires a dual core processor to perform well, putting the Q5 at a cost-disadvantage from the start. All of this means that current BB7 hold-outs waiting to convert may not have much to look forward to," cautioned the analyst.

Blackberry is also struggling in the UK.

"Our checks have repeatedly come back negative from these geographies. On top of this, the Managing Director for the UK abruptly left the company this week. Certainly, this could be an aberrant action; however, put together with our checks it does not indicate the progress we had hoped to see," concluded Modoff.

For an analyst ratings summary and ratings history on BlackBerry (NASDAQ: BBRY click here. For more ratings news on BlackBerry click here.

Shares of BlackBerry closed at $14.44 yesterday.


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Comments

adds new meaning to title "Anal yst "
rim1 on 2013-06-18 13:29:30
Mark as Spam | Reply to this comment

Did you "fall off the fence? "and impale yourself where sun dont shine?


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