BlackBerry (BBRY) Build Plans Raised, Returns Normal, Phablet on the Way - Jefferies' Misek

April 16, 2013 7:29 AM EDT
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Jefferies' Peter Misek reiterated his Buy rating and $22 price target on BlackBerry (NASDAQ: BBRY) Tuesday after Asia checks showed that build plans have been increased and U.S. checks showed that return rates are not abnormally high.

"The build plans have steadily been increased since February," Misek notes. "Our Asia checks indicate that the builds have recently increased from 2M/month to 2M+. This lends us confidence to our above-consensus May Q (Jef $4.1B/$0.50 vs. St $3.4B/$0.03) and Aug Q (Jef $3.9B/$0.37 vs. St $3.3B/$0.11)."

Misek also said checks confirm that 2-3 additional BB10 models are likely to launch before year end: A mid-range (i.e., ~$400) keyboard, a mid-range touch, and a 5" Z10-like device (slated for year end launch). He notes these models are not in their estimates at this time.

On U.S. return rates, Misek said anecdotal evidence he has collected suggests return rates are normal. "Our anecdotal U.S. discussions contradict recent allegations that Z10 returns are exceeding sales," he comments. "Overall, our checks indicate typical return rates. Of the few phones that were returned, the only main commonality we found is that buyers thought the Z10 had a keyboard. As it does not, they returned it and will buy the Q10 instead."

Misek continues to see large upside to May and Aug quarterly Street estimates and believes the company's MDM opportunity is underappreciated.

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

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