BlackBerry Sinks After Goldman Cuts To Sell, Sees Turnaround Getting Tougher
NEW YORK (TheStreet) -- The shares of BlackBerry (BBRY) are tumbling after Goldman Sachs downgraded the stock to Sell in a note to investors earlier today. The firm downgraded the stock because it believes that the company's fiscal 2016 software revenue is likely to be significantly less than its guidance and that its turnaround is entering a more challenging phase.
WHAT'S NEW: BlackBerry's software revenue for fiscal 2016, which began last month, is likely to come in well below its guidance of $500M, Goldman analyst Simona Jankowski predicted in a note to investors today. The analyst said she reached that conclusion because Goldman's surveys suggest that there is a low level of interest in BlackBerry's Enterprise Mobility Management, or EMM, software among companies, and because BlackBerry's guidance suggests that it will be able to overtake the EMM sector's leaders within a year. Jankowski believes that this scenario is unlikely, as she thinks that its competitors have better traction than BlackBerry. The analyst expects BlackBerry's revenue from its services business to come in below expectations in fiscal 2016. Since BlackBerry will have shortfalls in its high margin software and services businesses in fiscal 2016, the company's losses are likely to rise in fiscal 2016 and fiscal 2017, the analyst predicted. She lowered her rating on the stock to Sell from Neutral and set a $9 price target on the shares.
PRICE ACTION: In early trading, BlackBerry sank 5.5% to $10.07.
Reporting by Larry Ramer.
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