Analysts Express Bearish Views on BlackBerry Ltd (BBRY) Ahead of Earnings

Telecommunication and wireless equipment company BlackBerry Ltd (NASDAQ:BBRY) is scheduled to post first quarter fiscal 2016 earnings on Tuesday, June 23 before the market opens. Blackberry had been posting profit losses over the past several consecutive quarters until its latest quarterly earnings report on March 27 when the company finally turned cash-flow positive. A big reason for the company’s positive turnaround is CEO John Chen, who decided to shift the company’s focus from mobile smartphones to software.

Wall Street anticipates the company to post a loss of ($0.03) a share on $683.65 million in revenue. This is a significant increase from a loss of ($0.11) a share but also a hefty drop from $966 million in revenue year-over-year.

For the full year, Blackberry forecasts revenue of $600 million from the software segment of the business. Blackberry is looking at its new BES 12 software to rake in the majority of this estimate. Blackberry’s BES 12 software is compatible with all platforms, including Apple’s iOS and Google’s Android. Analysts and investors will be looking at Blackberry’s first quarter software revenue to see if it is substantial enough to keep the company afloat. However, despite the lofty software revenue goal, Blackberry’s software business only makes up 10% of its total revenue. The majority of Blackberry’s revenue comes from hardware.

Furthermore, investors are expecting Blackberry to either confirm or deny plans that it will work with Samsung to make a new smartphone device and get rid of its own operating system in favor of an Android-based operating system.

Morgan Stanley analyst James Faucette weighed in on Blackberry on June 18, maintaining an Underweight rating on the stock with a $7 price target. The analyst sees Blackberry’s $600 million full year software revenue goal as a bit ambitious. Faucette believes the company will eventually reach this number, noting, “If shareholders begin to re-evaluate the trajectory of BlackBerry’s enterprise software business… eventually (2-4 years) building a $600 [million a year] software and messaging business seems reasonable to us.”

James Faucette has rated Blackberry a total of 24 times, earning an 85% success rate recommending the stock and a +21.8% average return per recommendation. Overall, he has a 76% success rate recommending stocks and a +10.1% average return per recommendation.

Oppenheimer analyst Andrew Uerkwitz also weighed in on Blackberry on June 22, maintaining a Perform rating on the stock ahead of the company’s earnings. The analyst is not confident in Blackberry’s “handset business heading into the quarter” and believes Wall Street’s “consensus underestimates the difficulty BBRY is facing for its smartphones vs. competition.” However, he believes the company is “1-2 quarters away from seeing material traction of the software business, which could provide management with some positive momentum.”

Andrew Uerkwitz has rated Blackberry a total of eight times with no success and a -9.4% average loss per recommendation. Overall, he has a 59% success rate recommending stocks and a +6.4 average return per recommendation.

On average, the top analyst consensus for Blackberry on TipRanks is Moderate Sell.


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