Shares of BlackBerry Limited (BBRY) are down 5% to $10.26 in pre-market trade after Morgan Stanely (MS) downgraded its rating to ‘Underweight’ from ‘Equal-Weight’, citing valuation concerns. In a research note to investors this morning, the firm said it believes the market has largely valued the smartphone maker based on assumption.[via Benzinga] We believe that the market has swung too optimistic on the name “based on the assumption that BlackBerry will generate an incremental $250M in software revenue and an incremental $100M in messaging revenue during FY16,consistent with the targets set out by BBRY CEO John Chen (from roughly $0 today). We estimate this implies that BBRY will not only successfully retain roughly its entire existing enterprise subscriber base—plus more—it will also convince that subscriber base to increase ~3x how much it is paying BBRY today.”
Morgan Stanely has a $7.00 price target for shares, implying 31.77% downside from BBRY’s current pps.
Currently, there are 23 analysts that rate BlackBerry a ‘Hold’, while 4 rate it a ‘Sell’. There are no analysts rating the name a ‘Buy’. BBRY has a median Wall Street price target of $10.00 with a high target of $17.00.
In the past 12 months, shares of Waterloo, Canada-based company have traded between a low of $5.44 and a high of $12.54. Shares are up 74.39% year-over-year, and 44.62% year-to-date.