Shares of BlackBerry Ltd (NASDAQ: BBRY ) dipped on Monday after Goldman Sachs resumed its negative coverage of the once-powerful smartphone maker.
Goldman analyst Gabriela Borges reiterated her "sell" rating for BlackBerry in a note to clients. The note also projects a 10% downside for BlackBerry to set up a new $8.50 per share price target.
BlackBerry's stock had climbed almost 40% since the start of the year after the company set its sights on software opportunities, which include cyber security.
On top of that, BlackBerry moved into the autonomous driving world with its QNX Autonomous Vehicle Innovation Centre. BlackBerry reached a deal with Ford F to send some of its software developers to the car giant to help work on driverless car technology.
The company also recently received a boost from Qualcomm, Inc. (NASDAQ: QCOM ), which reached an $815 million deal to pay BlackBerry past-due royalty fees. The repayment plan helped set up BlackBerry's stock buyback of 31 million common shares. Still, despite a few apparent positives, the analyst noted multiple reasons to be cautious of BlackBerry going forward.
"However, with automotive not likely ramping materially until 2019/2020 (based on management comments and 2-3 year production cycles), we believe near-term fundamentals will still matter for the stock (as evidenced by 15% underperformance post the last earnings report, after reporting 1Q18 revenue 9% below the Street)," Borges wrote in a note to clients .
"On this point, we believe the enterprise mobility market is becoming incrementally more competitive, in part due to bundling from larger suite providers, and in part due to growth from non-regulated industries, where BlackBerry's product is less well positioned. We are 3% below the Street on FY18 revenue and 8% below on FY19."
Shares of BlackBerry dipped by 3.76% in morning trading. The company is currently a Zacks Rank #2 (Buy), but scored an "F" grade for both Value and Momentum in our Style Score system.
BlackBerry's software sales gained 2% year-over-year last quarter to $169 million. The small increase seemed to not have been enough as the company's stock price has fallen from $11.06 per share to the $9.06 a share it rests at today, since it reported its first-quarter earnings in late June.
The company began to transition away from the BlackBerry smartphones that made the company famous. However, BlackBerry's newest phone offering, the KeyOne, which it licensed to Chinese manufacturer TCL Communications, failed to lift its non-software business. BlackBerry's hardware revenues plummeted 76% from the year-ago period.
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