BBRY: BlackBerry rises after Morgan Stanley analyst Ehud Gelblum lifts rating to buy

A man tries a Research In Motion Ltd.

A man tries a Research In Motion Ltd. (RIM) BlackBerry 10 smartphone prototype at the BlackBerry Jam Asia developer conference in Bangkok, Thailand. (Nov. 29, 2012) Photo Credit: Bloomberg News

advertisement | advertise on newsday

BlackBerry rose as much as 7.4 percent after Morgan Stanley analyst Ehud Gelblum raised his rating on the stock to the equivalent of buy, saying the new BlackBerry 10 smartphone lineup will boost profit margins.

The stock climbed as high as $16.14 in New York, reaching the highest price in more than a month. Through yesterday, shares of the Waterloo, Ontario-based company had increased 27 percent this year.

advertisement | advertise on newsday

As existing users upgrade to newer phones, it should "meaningfully" drive up profitability and the average selling price for a BlackBerry, two key benchmarks for the company, Gelblum said today in a note. He estimates that gross margin -- the percentage of sales left after production costs -- reached 33 percent in February, up from 31.6 percent in November.

BlackBerry, formerly known as Research In Motion Ltd., is counting on the new Z10 and Q10 phones to regain market share after years of losing ground to Apple Inc.'s iOS and Google Inc.'s Android platform. Android, used by Samsung Electronics Co., and iOS together accounted for 91 percent of global smartphone sales in the fourth quarter, according to IDC. BlackBerry's share dropped to 3.2 percent.

Gelblum, who is based in New York, raised his rating to overweight from underweight and boosted his target price to $22 from $10. Still, the probability that BB10 emerges as a "viable" third operating system remains small, he said.

The latest LI business news in your inbox daily. Get the Biz Briefing newsletter!

Comments now uses Facebook for our comment boards. Please read our guidelines and connect your Facebook account to comment.

You also may be interested in: