RBC upgraded Blackberry to $11.00Financial Post
Mr. Sue expects BlackBerry’s services revenues to decline at a slower rate than previously forecast and also anticipates its purchase commitments will decrease. Factor in the company’s real estate sale and operating expenditure cuts, and the analyst thinks BlackBerry’s cash flow goal is achievable.
He raised his target price on the stock to US$11 from US$10.
“Real earnings may still be years away for BlackBerry, but the slope of the service revenues decline appears manageable,” Mr. Sue told clients, pointing to the forecasted 27% year-over-year decline in fiscal 2015 dipping to 19% in fiscal 2016.
“The transition of consumers from BB7 and legacy devices to BB10 is a headwind to subscriber revenue, but we believe enterprise service revenue is more sustainable than consumer,” the analyst added.
RBC’s recent survey of more than 1,000 enterprise users continues to show a sticky customer base in the financial, government and legal sectors. But Mr. Sue believes BlackBerry needs to act fast to protect these segments as the preference for its brand (6%) has fallen below Motorola (7%). Apple remains in top position with 54% of respondent.
Mr. Sue is the second analyst in as many weeks to raise his outlook on BlackBerry in anticipation of it becoming cash flow break-even.
On February 4, CIBC World Markets analyst Todd Coupland said the company should be cash flow positive by the fourth quarter of fiscal 2015 as a result of its cost reduction plans.
https://business.financialpost.com/2014/02/12/blackberry-ltd-heading-in-right-direction-on-cash-flow-rbc/?__lsa=7bc1-5127