BlackBerry (BBRY) Subscriber Base is Its 'Achilles' Heel'
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Price: $11.57 --0%
Rating Summary:
4 Buy, 31 Hold, 12 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 11 | New: 13
Rating Summary:
4 Buy, 31 Hold, 12 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 11 | New: 13
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TD Securities maintained a Hold rating on BlackBerry (Nasdaq: BBRY) with a price target of $17. With Q1 results just around the corner (June 28th), analyst Scott Penner is urging investors to pay attention to recurring revenue.
"Our model calls for 3.7mm in BB10 shipments vs. our estimate of consensus at 3.2mm. This drives our total revenue to $3.56bln and EPS to $0.19, both ahead of the Street at $3.37bln and $0.05, respectively," said Penner.
Penner thinks Blackberry's subscriber base will be its Achilles' heel.
"Our chief concern for BlackBerry remains the sustainability of profitability as users transition to a new services Model. Keep in mind that for F2013, software/services was 100%+ of BlackBerry gross margin dollars. With a larger proportion of the BlackBerry base eligible to upgrade to BB10 in the coming quarters (which in the consumer model carries no services revenue), the decline in ARPU will continue, and could accelerate . . . against that backdrop, we believe that longer-term profitability remains uncertain," he said.
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 $13.78 yesterday.
"Our model calls for 3.7mm in BB10 shipments vs. our estimate of consensus at 3.2mm. This drives our total revenue to $3.56bln and EPS to $0.19, both ahead of the Street at $3.37bln and $0.05, respectively," said Penner.
Penner thinks Blackberry's subscriber base will be its Achilles' heel.
"Our chief concern for BlackBerry remains the sustainability of profitability as users transition to a new services Model. Keep in mind that for F2013, software/services was 100%+ of BlackBerry gross margin dollars. With a larger proportion of the BlackBerry base eligible to upgrade to BB10 in the coming quarters (which in the consumer model carries no services revenue), the decline in ARPU will continue, and could accelerate . . . against that backdrop, we believe that longer-term profitability remains uncertain," he said.
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 $13.78 yesterday.
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