Why BlackBerry Just Got an Upgrade

NEW YORK (TheStreet) -- BlackBerry (BBRY) is becoming a different company under CEO John Chen than it was under former CEO Thorsten Heins, as it moves away from devices. With the added emphasis on services, enterprise and messaging, Wall Street is starting to take notice. However, the company isn't out of the woods just yet.

Oppenheimer analyst Ittai Kidron has upgraded shares of Waterloo, Ontario-based BlackBerry to "perform" from "underperform," noting that under Chen, BlackBerry is changing itself to focus more on enterprise, but the next few quarters may be rocky. "We continue to see a tough and long road ahead for BlackBerry as it pursues its enterprise-focused
transformation and we wouldn't be surprised by poor results and missed milestones," Kidron wrote in his note. "However, the initial euphoria around CEO John Chen's strategy has subsided and we believe the hard reality has sunk in with investors who are now more negatively biased for a large gap in 2014 and more realistic asset valuations. We see better SoP support around $7 from immediate value in QNX and IP and potential in messaging and enterprise. And as BlackBerry moves further away from devices and shows progress in enterprise, investors could see value in assets limiting downside."

Kidron notes BlackBerry's most valuable assets are its patents, the QNX operating system, BBM, its position in enterprise, as well as its $1.96 a share in cash. Given the recent hoopla surrounding messaging apps such as WhatsApp, which Facebook (FB) recently announced it was acquiring, BBM could have some upside to it. BBM ended the quarter with 115 million users, of which 85 million are monthly active users.

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