BlackBerry (BBRY) Stock Falling Today on Goldman Downgrade
NEW YORK (TheStreet) -- Shares of BlackBerry (BBRY) are falling, lower by 4.59% to $10.18 in early market trading on Monday, after analysts at Goldman Sachs downgraded the company to "sell" from "neutral" this morning.
Goldman also cut its price target to $9 from $10, noting the 60% rise in shares since John Chen became CEO in November of 2013.
The firm forecasts widening losses in 2016 and 2017 due to the shortfall in high-margin software and services revenue, instead of a return to profitability.
Goldman now expects a 13% revenue miss in the fourth quarter due to weak hardware sales after the delayed rollout of the classic handsets.
Last Tuesday, the company unveiled its five inch touch-screen smartphone, the Leap. The device, which will replace the Z3 device is aimed toward mid-level buyers in emerging markets as the company attempts to regain customers.
With the Leap, BlackBerry hopes to boost market share among younger professionals who are used to touch screens.
Canada-based BlackBerry is a provider of wireless solution, comprised of smartphones, service and software. The company provides hardware, software and services that support multiple wireless network standards.
It also provides platforms and solutions for access to information, including email, voice, instant messaging, short message service, internet and intranet-based applications and browsing.
Separately, TheStreet Ratings team rates BLACKBERRY LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate BLACKBERRY LTD (BBRY) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its declining revenues."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Computers & Peripherals industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- The revenue fell significantly faster than the industry average of 31.5%. Since the same quarter one year prior, revenues fell by 33.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that BBRY's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.49 is high and demonstrates strong liquidity.
- BLACKBERRY LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BLACKBERRY LTD reported poor results of -$11.17 versus -$1.20 in the prior year. This year, the market expects an improvement in earnings (-$0.15 versus -$11.17).
- The gross profit margin for BLACKBERRY LTD is rather high; currently it is at 63.81%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -18.66% is in-line with the industry average.
- You can view the full analysis from the report here: BBRY Ratings Report
