Blackberry (Research In Motion Ltd.)
(BB - TSX; BBRY - NASDAQ, C$16.53)

Rating: HOLD ↓ / Target Price: $18.00
Moving to a Hold
While we continue to believe Blackberry is on a recovery path, we would no longer be chasing the stock at these levels, and we would move to a more cautious HOLD and buy-on-dip strategy.  
The stock, at over $16.00, is starting to at least partially price in our best guess (and we emphasize "guess") at earnings power in C2014 of about $1.60/sh. This is based on a set of assumptions that we agree are pretty hard to nail down, but basically we think the stock has priced in about 30 million units/year of BB10 products.

On a more short-term basis, we are also concerned that unit sales in the February quarter to be reported at the end of this month will not be that exciting, given the staged launch and some data points from the Jabil results on Wednesday. We had modelled 1 million BB10 units for that quarter, but we expect something less than that now. We are more hopeful for margins as we think initial sales of the Z10 have carried strong ASPs.

We've liked the stock since it was below $9.00, so we are pretty pleased with the return, and we would look to be more constructive on the stock once we get an update at the end of the month. 

Previous Notes (click for full note)

Tom Astle, P.Eng, CFA  

Head of Research   


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