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Top Analyst Sets Expectations on BlackBerry (BB) Following Earnings


BlackBerry (NYSE:BB) investors reacted to the earnings report with some skittishness, sending the former smartphone giant’s shares down nearly 9% in Friday’s trading session.

BlackBerry reported Q1/F’19 revenue of $217 million versus the Street’s $209 million estimates. However, software & Services sales of $193 million were below the Street’s $196 million, as Enterprise Software, the largest sub-segment, missed estimates and declined 18% y/y.

BlackBerry maintained guidance for double-digit software billings growth, positive EPS, and positive free cash flow. Management now guides for total software and services revenue growth of 8-10% y/y.

In reaction, Canaccord’s top analyst Michael Walkley reiterated a Hold rating on BlackBerry shares, while lowering the price target to $10.50 (from $11.00), which represents a slight downside potential from current levels.

Walkley commented, “We anticipate steady F2019 revenue growth for the ESS and BTS divisions driven by strong doubledigit growth in BTS and Licensing revenue. We expect BTS automotive design wins to generate more meaningful revenue growth in C2019. Overall, we believe BlackBerry has stabilized its business and cost structure and now has the balance sheet to invest in driving growth for its targeted enterprise of things end markets. Following the lower expected run-rate for ESS revenue offset by higher Licensing revenues and lower runrate of operating expenses, we are increasing our F2019/20 pro forma EPS estimates from $0.01/$0.21 to $0.11/$0.22. With the stock slightly above our price target, we believe future growth potential is priced in the shares.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Walkley has a yearly average return of 18.2% and a 66% success rate. Walkley has a -2.5% average return when recommending BB, and is ranked #74 out of 4829 analysts.

Out of the 10 analysts polled in the past 12 months, 3 rate Blackberry stock a Buy, 5 rate the stock a Hold and 2 recommend a Sell. With a return potential of 8%, the stock’s consensus target price stands at $11.61