BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares are not in the good books of analysts with Wells Fargo being the only one optimistic on the Canadian firm. For consecutive six trading session, the stock hovered around $9.50, but on Monday for the first-time since mid-October slipped from the level on the back analysts’ comments.
Credit Suisse suggests ‘break up’ of businesses
Credit Suisse analysts came in bearish on the company, when they suggested ‘Break up’ of businesses as a possible solution. Analysts Kulbinder Garcha and Achal Sultania noted that the recent financials were well below the top-line expectations, and is the main reason why they continue with their skepticism.
Garcha and Sultania noted that the company is struggling to turn around the service stream and the loss making hardware business, suggesting that it is in the best interest of the company to break up.
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s service businesses have been on a low with subscriber bases declining, falling ARPU due to shift towards BB10 and the issues related to the difficulty in the monetization of EZ Pass. Gross margin for BlackBerry is declining due to the decrease in the revenues from their multiple business segments, noted analysts.
Also, analysts at JP Morgan noted that the aggressive cost cutting will only hurt BlackBerry, especially reducing the R&D will affect the company in the long-run.
Some comfort for BlackBerry
Wells Fargo, however, believed that the company still can exercise the “strategic alternatives” such as restructuring or divestitures as key elements for a turnaround in the stock price, other than takeover.
Wells Fargo stated that the recent earnings report does hint “some signs of life.” However, analysts maintained a cautious outlook, and remained skeptical if BlackBerry will be able to hit the $500 million Software revenue target, which analysts believe will be most “critical” factor moving forward.
Wells Fargo assigned Market Perform rating to BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), but also lowered 2016 revenue and EPS estimates due to lower hardware and BBM revenue.
BlackBerry could not break the resistance at $9.46 after a flat opening on Monday, reaching $9.45 before reversing course. On Monday, BlackBerry shares closed down 6.98% at $8.80 and year to date the stock is down 20%.
