Should you buy BlackBerry (BB) shares ahead of earnings tomorrow? BMO analyst Tim Long says wait. The analyst reiterates a Market Perform rating on BB, with a price target of $11, which represents a potential upside of 8% from where the stock is currently trading.
Long stated, “We are above the Street on August quarter revenues and a penny ahead on EPS, owing to the Street modeling an operating loss vs. our 1.9%, on similar gross margin assumptions. While we expect total revenue to decline 13% y/y, we anticipate Software growth of 3% y/y off of tough comps in the year-ago quarter (+26% y/y last year). For the November quarter, we are just above the Street on revenue and a penny ahead on EPS, despite being slightly below on operating margin.”
“We note that the company adopted ASC 606 last quarter, which should make for lumpy y/y comps going forward as it was not applied to financials retrospectively. We think the accounting changes will have a negative effect, in particular, on the enterprise software business (albeit transient). Due to the adoption of ASC 606, management now guides for total software and services revenue growth of 8-10% y/y (vs. our 8%),” the analyst continued.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Tim Long has a yearly average return of 22% and a 70% success rate. Long has a 15.8% average return when recommending BB, and is ranked #116 out of 4878 analysts.
Net net, Wall Street believes Long is smart to play it safe when it comes to BlackBerry’s prospects ahead, as TipRanks analytics reveal BB as a Hold. Out of 8 analysts polled in the last 3 months, 5 remain sidelined on BlackBerry stock, while 3 are bullish. With a potential upside of nearly 20%, the stock’s consensus target price stands at $$12.19. (See BB’s price targets and analyst ratings on TipRanks)