Canaccord Genuity Cuts Price Target on BlackBerry (BBRY) Following Mixed 3Q
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Canaccord Genuity reiterated a Hold rating on BlackBerry (NASDAQ: BBRY), and cut the price target to $7.50 (from $8.00), following the company's 3Q earnings report. Management reported revenues of $301M versus estimates of $326M due to lower than anticipated software revenue. However, due to continued strong cost controls EPS exceeded consensus estimates by 2 cents.
Analyst Michael Walkley commented, "BlackBerry reported lower than expected Q3/F’17revenue of $301M versus our $326M estimate due to lower than anticipated software revenue, as core software excluding license revenue was basically flat sequentially. Mobility solutions missed consensus estimates by $13.8M and software and services by $10M. However, due to continued strong cost controls EPS exceeded consensus estimates by 2 cents. Management reiterated total software and licensing revenue will grow roughly 30% in F’17 implying a strong Q4/F’17 ramp in software and services revenue, basically offset by the ongoing decline in SAF or services revenue. BlackBerry recently announced a long-term licensing agreement with TCL to provide security and software solutions by designing, manufacturing, and providing support for BlackBerry branded mobile devices including a dedicated sales teams. The TCL agreement covers most of the globe except for Indonesia due to BlackBerry’s previously announced JV in that region. As a result of the deal, BlackBerry branded devices will remain available around the world, and BlackBerry will continue its transition to a software and services provider. Following the restructuring, we expect ongoing costs related to software development for mobility solutions, and we have removed the device hardware business from our estimates starting in Q3/F2018. We maintain our HOLD rating and reduce our price target to $7.50 based on our sum of the parts valuation and updated estimates."
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 $7.50 yesterday.
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