Cleveland Research Analysts have updated their position on BlackBerry, rating the stock a Neutral with a 12-month price target of $7.73.
The analysts believe that the BlackBerry Priv is being well received in several markets and gaining more carrier support.
BlackBerry is targeting to sell 5 million smartphones annually before it can start generating profits in its hardware business. With the early interest that the Priv attracting, Cleveland sees BlackBerry moving closer to its unit sales target in 2016.
Cleveland also predicts that more carriers will announce support for Priv in the coming months. In the U.S., only AT&T is initially supporting Priv, but Verizon and T-Mobile US are expected to carry the device sooner rather than later.
Cleveland also speculates that BlackBerry could be working on a second Android smartphone, possibly motivated by the warm reception of Priv. The downside is that sell of off-platform handsets like Priv deny BlackBerry subscriber access fee (SAF) revenue, which could see Services income plunge or stay weak for long.
The analysts believe that the BlackBerry Services business is falling short of growth expectations but sees BlackBerry’s $500 million Software revenue target achievable.
Cleveland noted that early closure of the Good Technology deal could see BlackBerry escape some pressures in the Services business. Good Technology is expected to contribute overall revenue of $160 million in the first year.
