NEW YORK (TheStreet) -- Shares of BlackBerry Ltd. (BBRY) are dropping 1.86% to $8.95 after Credit Suisse estimated 2016 first quarter revenue of $627 million and a loss of $0.01 per share. That compares to the consensus estimates of $684 million for sales and an earnings loss of $0.08.
BlackBerry is expected to release its 2016 first quarter earnings report on June 23, and Credit Suisse maintained its "underperform" rating with $6 price target.
The firm believes that subscriber base will continue to erode, and the monetization of EZ Pass remains difficult in a competitive MDM (Mobile Device Management) market environment.
"The continued decline of services revenue and the limited visibility of MDM remains the principal risk to BlackBerry turnaround, and we continue to have reservations on their ability to ramp up software and operate more competitively," Credit Suisse analysts said.
BlackBerry is a provider of mobile communications and services that is engaged primarily in the provision of the BlackBerry wireless solution, consisting of smartphones, service and software. For more on its first quarter earnings preview, click here
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 several weaknesses, 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 gross profit margin for BLACKBERRY LTD is rather high; currently it is at 62.58%. Regardless of BBRY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BBRY's net profit margin of 4.24% is significantly lower than the industry average.
- The revenue fell significantly faster than the industry average of 33.3%. Since the same quarter one year prior, revenues fell by 32.4%. 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. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.69 is very high and demonstrates very strong liquidity.
- Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: BBRY Ratings Report