BlackBerry lacks evidence of a ‘fundamental turnaround’


Shares of BlackBerry BBRY, +7.14% surged 7.1% to close at $7.80 Tuesday after Morgan Stanley upgraded the stock to equal-weight from underweight citing the company’s cash stockpile and plans to cut costs. BlackBerry’s cash balance is worth roughly $3.50 to $3.75 a share, more than half of its current share-price value, the bank reported. The company had $3.3 billion of cash and short-term investments as of the end of its May quarter, according to FactSet.

But Morgan Stanley only maintained its 12-month price target of $7, which is off sharply from the stock’s June 2008 all-time high of $147.55, saying there is no evidence supporting a “fundamental business turnaround.”
“Our upgrade to equal-weight is not due to improving business fundamentals or a software strategy that is becoming successful,” said analyst James Faucette. “Can the company stabilize its user base? We are skeptical.”