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BlackBerry continues to baffle Wall Street as estimates swing wildly

June 25th, 2013 at 12:05 PM
BlackBerry Q1 2014 Earnings Preview

Wall Street’s views on BlackBerry 10 sales have been all over the map in recent months. As we approach the company’s earnings announcement for the May quarter on June 28th, wild swings have continued. Investors’ reaction to the report is likely to be strong: more than 30% of the entire stock float for BlackBerry has recently been sold short. This could mean a violent short squeeze if BlackBerry OS 10 volumes beat estimates. However, the recent increases in estimates mean that investor expectations may have spiked over the past month: It is possible that 3.5 million Z10 and Q10 units sold during May quarter is now a bar that BlackBerry has to clear in order to beat the consensus.

Among the recent estimate changes, RBC’s Mark Sue hiked his BB10 projection from 2.75 million units to 3.5 million — a 27% jump. A week ago, Societe Generale moved its BB10 projection to 5 million units, roughly 40% above Wall Street’s consensus. SG executed a rare move, lifting its rating on BlackBerry shares from a Sell directly into a Buy. Jefferies is in the 4 million unit camp.

Interestingly, some houses rating BlackBerry as Neutral are lifting their device volume estimates sharply: UBS has a lackluster share price target of $13, but raised its BB10 estimate from 3 million units to 3.7 million this week. This is another big swing; a 23% unit volume projection hike in a single report.

Perhaps tellingly, many BlackBerry bears like BMO Capital have started talking about discrepancies between sell-in and sell-through, arguing that BlackBerry is shipping far more devices than consumers are buying. This could be a sign that bears are getting nervous about a possible May quarter upside surprise and have started rehearsing explanations about why even a strong shipment figure may not actually be all that relevant.

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