In a recent report, Cowen analysts gave their take on BlackBerry Ltd BBRY 2.02% following the company’s presentation at the Mobile World Congress. Analysts believe that BlackBerry still has a long way to go in its transition to a sustainable business model.
Transition Continues
BlackBerry unveiled its new Leap smartphone at the media event, but analysts believe that investors shouldn’t put too much emphasis on the role hardware will play in the future of the company. Analysts believe that BlackBerry is currently about halfway through its long-term transition from a hardware-centric business to a “software-centric, cross-platform enterprise mobility management and security play.”
Hardware Remains Important
Despite the move toward software, hardware still has an important role to play in the near-term. Major software revenue is still several quarters away. In the meantime, hardware devices such as the Leap still account for more than 45 percent of BlackBerry’s revenue.
The unveiling of the Leap also came with an announcement by BlackBerry of plans to add three additional new smartphones to its 2015 portfolio.
The Leap is a 5.0″ all-touchscreen device with an 8MP camera, a 25-hour battery life and BlackBerry’s signature security system. The Leap is a departure from BlackBerry’s other recent releases that have emphasized the traditional physical keyboard. Analysts believe that the Leap will be replacing the market of the Z3 and, therefore, should be considered a success if it meets or exceeds the Z3’s 3.5-4 million in annual sales.
Outlook
Though little is known about the three additional BlackBerry smartphones coming later in 2015, analysts are forecasting a 45 percent year-over-year increase in hardware revenue. Cowen has a Market Perform rating on BlackBerry and a $10 target for the stock.
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