BlackBerry (BBRY) U.S. Z10 Launch Slightly Above Modest Expectations - Jefferies

March 25, 2013 6:54 AM EDT
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While Goldman Sachs downgraded BlackBerry (NASDAQ: BBRY) Monday, on what it called a disappointing Z10 U.S. launch, Jefferies' Peter Misek is more sanguine. He said the pace of sales was slightly above modest expectations.

Following checks with 30+ stores, Misek said, "we think demand is slightly better than our very modest expectations." At AT&T stores, checks indicate that initial sell-in appears to be generally 10+ per store. Most cited sales as okay with a few slower and a handful stronger, the analyst noted.

He said the AT&T Business is seeing significant interest and could account for a meaningful portion of demand.

"We note that even if BBRY only has a niche 5% of the U.S. smartphone market with BB10 that represents a substantial rebound from its current <2% share," he said.

Verizon (NYSE: VZ) will launch the Z10 on 3/28, and the analyst believes the recent 1 million BB10 order was from Verizon. "Our checks indicate that Verizon business sales are apparently very strong. We estimate that Blackberry's BB10 build plans were at 1M a month, went to 1.2-1.5M a month, and now are ~2M a month.

Misek also said that while near-term focus continues to be on the phone, BlackBerry's mobile device management (MDM) opportunity is underappreciated.

The firm maintained a Buy rating and price target of $19.50 on BlackBerry.

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

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