Analyst Previews BlackBerry's Q2: Bookings Should Buoy Software Revenue

Previewing BlackBerry Ltd BBRY's fiscal year second-quarter results due before the markets on Thursday, TD Securities said it expects bookings to buoy software revenue.

As such, the firm maintains its Buy rating and 12-month price target of $11.50 on shares of BlackBerry.

Strong Bookings

Analyst Daniel Chan sees the booking strength he anticipates as a function of competitive wins, a more positive brand reception, growing direct salesforce and refined internal sales process. Chan thinks the security features provide competitive differentiation for BlackBerry's Unified Endpoint Management, or UEM platform, resulting in competitive displacements of AirWatch and MobileIron solutions.

The analyst also believes the changes made to brand and sales efforts are positively affecting bookings.

Technology Solutions Business Has Abounding Positive News Flow

TD Securities noted that QNX continues to leverage its leadership in the In-Vehicle Infotainment market into autonomous driving platforms, with the recent partnership with Delphi Automotive PLC DLPH. The company's Radar also announced a reseller agreement with Fleet Complete, the firm said.

The firm believes in order to grow the BlackBerry Technology Solutions business, both developing channel partners and direct sales force are important.

Expect Revenue And Cash Flow Drag To Taper

With hardware sales having ended in June, TD Securities expects revenue and cash flow drag to taper.

"There is still some volume in the channel that needs to be sold through, but we believe that the completion of the hardware exit implies that revenue drag should taper over the coming quarters and that cash flow will improve," the firm said.

As the company continues to successfully transition into a software company, TD Securities said it sees this in all the segments of the Software & Services business. Concluding the firm said it remains buyers of the stock, given the firm's building pipeline of near-term opportunities and significant capital available for deployment.

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