BlackBerry Limited (BB)

[chaostrader]

Goldman Sachs downgraded BlackBerry (NASDAQ: BBRY) from Neutral to Sell with a price target of $9 (from $10). Analyst Simona Jankowski believes turnaround efforts have reached a challenging phase, as CEO John Chen shifts from cutting costs to driving revenues. Jankowski thinks efforts in this area will fall short, and rather than a return to profitability, losses will widen in FY16/FY17.

"We think the success of BlackBerry’s turnaround hinges on its ability to grow its Enterprise Mobility Management (EMM) software business, where competitors include Mobile Iron, Airwatch (part of VMware), and Good," said Jankowski. "BlackBerry has set a target of $500mn in Software segment revenues for FY16(Feb), up from $250mn in FY15. We expect it to fall well short of that target and model revenues of $426mn, for two reasons. First, our surveys show very low buying intentions for BlackBerry’s EMM solution. Second, its target implies that it would leapfrog the market leaders in just one year, which we view as unlikely given the competitors’ much better traction

TARGET SHOULD BE $7