Cowen Keeps BlackBerry (BBRY) at Market Perform; Notes High Execution Risk, Low N-T Growth Drivers

Cowen and Company maintains its $7.50 price target and Market Perform rating on BlackBerry (Nasdaq: BBRY) following the mobile giant's Q4 results last Friday.

Analyst Timothy Arcuri commented, BBRY's ability to narrow its operating loss and shore up cash flows ahead of the more daunting parts of a planned strategic transition are commendable. However, given few, if any, non-hardware growth drivers appear likely to emerge near term, we expect execution risk will remain very high should Z3 and other new devices fail to deliver.

Arcuri is adjusting his FQ115 loss outlook from $.45 down to $.30 per share and FY15 adjusted loss from $1.10 to $.90 per share. The analyst said, We now assume net cash bottoms in FH1:15, contingent upon the timing of the company's planned sale of the majority of its Canadian real estate holdings. Of the remaining biz, we still believe Service has the most value (~$2/share or ~0.5x sales) as the ~58 million installed base should still generate moderate cash flow ahead of the critical BB12 launch in late autumn. We continue to assign zero value to BBRY's hardware business and a ~$250 million value (~$0.50/share) to its patent portfolio - still well below the $1.4B of intangible assets reported in FQ4:14. We now value BlackBerry Messenger (BBM) at ~$1.4B, a ~40% discount to WhatsApp's $42/MAU valuation based on continued installed base growth (+~5 million q/q, to 85 million) and upcoming enterprise extension via eBBM Suite/BBM Protected.

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

BlackBerry closed at $8.41 yesterday.

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