Societe Generale Upgrades BlackBerry to “Buy” on Strong Sales

Michael Teague |

BlackberrySociete Generale upgraded Blackberry’s (BBRY) stock from “sell” to “buy” after sales of the company’s new smartphones have consistently proven to be better than expected.

According to Andy Perkins, an analyst with the French financial services firm, “new handset sales have been faster than we previously assumed”. Societe Generale revised its forecast of first fiscal quarter sales for the company’s new Z10 model to 4 million, up from 1 million. Meanwhile, sales of the Q10 model featuring Blackberry’s signature keyboard could hit as much as 1 million.

In what could be a preview of the company’s earnings report due out on the 28th of June, Perkins also said that revenue for Q1 could jump to $3.7 billion, compared to the previous quarter’s figure of $2.7 billion, besting the $3.4 billion average of analyst estimates.

Back in February, the company looked as if it was teetering on the brink of extinction. Ever since setting the industry bar for cell phones prior the advent of touch-screen, its products have been overtaken by competitors such as Apple (AAPL) and now Samsung.

To provide some perspective on how far a cry the company is from where it once was one need only look at where the company was in June of 2008, just a few months after the inauguration of Barack Obama, famous for his allegiance to Blackberry’s phones. Indeed, back then, shares were trading at their all-time high of $144.56.

Today, the contrast could not be more evident. On Thursday, news of the upgrade sent shares up 6.34 percent, to $14.42, in response to the fact that Societe Generale upped its price target on the stock to $17. That said, shares for the company formerly known as Research In Motion Limited have advanced 21.5 percent in 2013, and just over 39 percent over the past 12 months.

The release of the Z10 and Q10 models was widely seen as Blackberry’s last stand, but investors were wary due to a strange advertising campaign purportedly aimed at a younger consumer base, and that was largely considered a flop during the most recent Super Bowl ad-extravaganza.

As well, the company’s staggered release strategy was confusing for investors and consumers alike. Still, Blackberry was able to rely on a loyal base of existing users who had been waiting Penelope-like for their company to offer them a new product by which they could re-validate their loyalty.

Furthermore, Blackberry has been quicker on the draw in emerging markets, with the slimmer and cheaper new Q5 model due out in mid-July. The company is also finally making its popular BBM messaging service available for iOS and Android platforms in July, and is in on the tablet game with its 7-inch Playbook product.

This may not seem like it adds up to much, given the rise to dominance of Android-powered Samsung phones, to say nothing of what Google (GOOG) may do with Android on its own. And of course for all its recent troubles, Apple is still making the iPhone, and is not likely to stop any time soon. But it has been enough to carry Blackberry through 2013 when there was no shortage of those at the outset of 2013 who had far more dire predictions about the company’s future.

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Companies

Symbol Name Price Change % Volume
BBRY BlackBerry Limited 7.84 -0.07 -0.88 2,656,430
GAB.P.H Gabelli Equity Trust Inc. 5.00% Ser H Cum Pfd 25.60 0.09 0.35 2,472
GOOG Alphabet Inc. 775.83 -11.07 -1.41 526,296

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