Wells Fargo analyst Maynard Um reiterated a Market Perform rating and $7.25-$8 valuation target on BlackBerry (NASDAQ: BBRY) ahead of results before the bell on Friday.

Um said their analysis suggests gross margin could be better than guidance.

"We forecast revs/EPS of $571MM/$(0.06) vs Street’s $565MM/($0.10) and guidance of in line or better than ($0.11) for FQ4. While GM guide is in the range of 40% (incl. the roll off of IP payment amortization), we forecast 47.6% assuming Priv units of 850K at GM of 25% and other segment GM holding relatively steady," Um commented. "That said, Priv appears to have only launched in 20 countries vs the 31 expected on the last call, which could have some impact on units though, on a relative basis, is still not large (our ests imply 40.5k units/country vs 27.4k)."

The analyst expects Software revenues for the year should exceed the $500MM target driven by a full qtr of Good and AtHoc as well as QNX growth.

Opex could benefit from restructuring in the qtr, though the full benefit is more likely in future qtrs (or offset by channel investments). They forecast FCF of $135MM.

The believe guidance next quarter will be dictated by sell-through of Priv and expect that visibility to whether a strategic decision needs to be made on the hardware (HW) business could come in the next quarter or two. Software should see growth for the full year driven by acquisitions and easy comps while Service revenues should continue to decline at a mid to high teens percentage pace, he said.

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 $8.01 yesterday.