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BlackBerry gets buy rating, $9.00 target from TD Securities

QNXTD Securities issued a report to clients and investors on Tuesday, setting a “Buy” rating on BlackBerry initiated by the reports author, analyst Daniel Chan
In a BNN segment titled “Could BlackBerry See a 30% Rally?”, journalist Amber Kanwar summarizes the report’s findings, noting that “sees 27% upside, a $9.00 U.S. target”.
Shares of BlackBerry on the Nasdaq closed today down 2.2 per cent to $6.915.
Kanwar outlines four reasons Chan believes make the case for BlackBerry’s undervalued status.
The report, she notes, sees meaningful growth in BlackBerry’s software business, which has been offsetting declines in the company’s “legacy” SAF (service activation fees) “that are really no longer relevant to BlackBerry’s model”.
Second, BlackBerry’s hardware business also provides the company with a lot of room to maneuver, as evidenced by the Priv phone’s apparent success at using an Android operating system running a BlackBerry phone.
BlackBerry CEO John Chen describes BlackBerry’s hardware division as a de-risked business, in that BlackBerry no longer takes on inventory risks because the company has outsourced the phone’s production.
Third, BlackBerry is finally seeing the fruits of monetizing its patent portfolio.

Chan believes BlackBerry could potentially unlock $2.25 billion worth of patent value, or $4.37 per share, and notes it is the fifth most powerful patent portfolio among major communications and internet companies, according to the Institute of Electrical and Electronics Engineers (IEEE).

Chan believes BlackBerry could potentially unlock $2.25 billion worth of patent value, or $4.37 per share, and notes it is the fifth most powerful patent portfolio among major communications and internet companies, according to the Institute of Electrical and Electronics Engineers (IEEE).
Fourth, BlackBerry is sitting on a $1.5 billion cash reserve. Not bad for a “troubled” technology company.
Daniel Chan is no stranger to BlackBerry. The analyst formerly worked for Scotiabank, where he also worked the BlackBerry beat.
Chan is also optimistic about BlackBerry Technology Solutions (BTS), headed by president Sandeep Chennakeshu and one of four key components of BlackBerry’s business, the other three being Devices, Enterprise Services and Messaging.
Chennakeshu suggested recently that BlackBerry’s IoT play will likely be a 200 mm weatherproof high-value asset tracking box with an IP67 certification and a five-year battery life.
Tracking assets along the supply chain is set to be one of the major components of the Internet of Things market.
BTS is composed of five units: QNX Software Systems, Certicom, Paratek, the BlackBerry Internet of Things (IoT) Platform, and Intellectual Property and Patent Licensing (IPPL).
QNX in particular is well positioned now to be a key player in the Internet of Things market, particularly in the automotive realm, where QNX is installed in about 60 million cars and has approximately a 60% share of the in-vehicle “infotainment” market.
Back in 2010, then Research in Motion Vice Chair Mike Lazaridis said, “We see the car as the ultimate BlackBerry accessory.” Not many at the time possessed details of his ambitions.
BlackBerry last issued a quarterly earnings report on December 18, 2015, reporting $-0.03 EPS, beating analyst expectations by $0.12.
Watch the BNN report on Chan’s TD Securities report here.

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