MKM Partners Raises Price Target on BlackBerry (BBRY) Following Better Than Expected 3Q
MKM Partners reiterated a Neutral rating on BlackBerry (NASDAQ: BBRY), and raised the price target to $8.50 (from $7.25), following the company's 3Q earnings report. Revenues came in at $557mn, compared to MKM's $504mn estimate. Management expects sequentially flat, or slightly better, revenues in the current quarter. 3QFY16's $53mn in IP sales are expected to go away, and Services revenues are predicted to decline another 18% q/q.
Analyst Michael Genovese commented, "BlackBerry reported better than expected sales, margins and earnings and the stock is rallying nicely. However, the quarter was not as good as it looks on the surface. Hardware units at 0.7mn were weaker than expected, although ASPs and revenues beat due to one month of Priv sales. We still doubt the Hardware business will ever reach sustainable breakeven profitability and we do not think the Priv will provide much more than one quarter boost in 4Q before the product cycle begins to fade. Additionally, the upside in Software in 3QFY16 was driven by higher intellectual property revenues than expected, which is likely not sustainable. We remain lukewarm on BBRY's prospects, and we are maintaining our Neutral rating."
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Shares of BlackBerry closed at $7.80 yesterday.