Imperial Capital Raises Price Target on BlackBerry (BBRY) to $8.50 Following 2Q Report
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Imperial Capital reiterated an In-Line rating on BlackBerry (NASDAQ: BBRY), and raised the price target to $8.50 (from $7.00), following 2Q earnings report. Management reaffirmed its FY17 outlook for the software and services business and continues to expect revenue growth of 30%. Management also estimates adjusted EPS of ($0.05)-$0.00 for FY17, up from previous guidance of approximately ($0.15).
Analyst Michael Kim commented, "We are maintaining our In-Line rating on BBRY shares and raising our one-year price target of $8.50 based on sum-of-the-parts valuation. Our price target implies potential upside of 7% above recent levels. BBRY’s decision to cease internal hardware development and outsource to partners represents a key strategic shift which will transition the company into a focused software and services vendor with improved margin and cash flow profiles. However, we have significant uncertainty around new licensing agreements, steady-state royalty rates, and end-customer demand for new devices based on the company’s secure Android software. We also look for higher growth visibility of the company’s key software offerings, in particular enterprise mobility, Radar (asset tracking), AtHoc (crisis communications), and QNX (embedded systems). We additionally highlight the appointment of a new CFO effective 10/1/16, who previously worked closely with CEO John Chen. At recent levels, we think BBRY shares offer balanced risk/reward and we would seek a more attractive entry point."
Shares of BlackBerry closed at $7.94 yesterday.
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