Blackberry Ltd. (NASDAQ: BBRY) is scheduled to report its financial results Tuesday before the markets open. There are consensus estimates from Thomson Reuters that call for a net loss of $0.03 per share on $683.65 million in revenue. In the same period of the previous year the company had a net loss of $0.11 per share on $966.00 million in revenue.
Source: courtesy of BlackBerry Ltd.
Withstanding the hyper-competitive smartphone field, BlackBerry has been battered and bruised, and at this point it seems nearly impossible to believe that the company is capable of turning itself around. Most analysts’ sentiments reflect this belief because they are generally all neutral or negative.
Credit Suisse reiterated an Underperform rating for BlackBerry with a price target of $6, implying downside of 34% from current prices. The firm maintains that the continued decline of service revenue coupled with the limited visibility of mobile device management (MDM), remains the principal risk to the turnaround. The firm continues to have reservations on BlackBerry’s ability to ramp up software and operate more competitively.
Despite the hardware business generating a profit again in the previous quarter, BlackBerry realized a larger than forecast drop in hardware revenue to $277.2 million, down 24% quarter over quarter. Credit Suisse continues to believe that sustainable sell-through will prove challenging in the smartphone market.
The brokerage firm believes the best move for BlackBerry would be for the company to break up, in consideration of the inherent challenges in turning around the services stream and subscale loss making hardware business.
If BlackBerry were to shut down its hardware business by the end of fiscal 2015 and wind down its services business by the end of fiscal 2016, Credit Suisse believes it would have a net asset value of $3.2 billion, or $6 per share.
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A few other analysts weighed in on BlackBerry before its report:
- Cowen reiterated a Market Perform rating with an $11 price target.
- RBC Capital reiterated a Sector Perform rating with an $11 price target.
- Morgan Stanley reiterated an Underweight rating with a $7 price target.
Shares of BlackBerry were up 2.6% at $9.14 on Monday afternoon, in anticipation of earnings the next morning. The stock has a consensus analyst price target of $9.07 and a 52-week trading range of $8.59 to $12.63.
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