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‘Solid Demand’ for Z10, Says Jefferies; Margins Can Rise, Says UBS

BBRY: ‘Solid Demand’ for Z10, Says Jefferies; Margins Can Rise, Says UBS.

By Tiernan Ray

BlackBerry maker BlackBerry (BBRY) got more votes of confidence today, with Jefferies & Co.‘s Peter Misek reiterating a Buy rating on the stock and a $19.50 price target, citing his “store checks” showing “solid demand” for the recently released “Z10” touch-screen BlackBerry, and Wells Fargo‘s Maynard Um taking over coverage of the stock from Jennifer Fritzsche and raising it to an Outperform from Market Perform with a $19 to $20 “valuation range.”

BlackBerry stock is up 73 cents, or almost 5%, at $16.78.

Misek writes that he’s contacted 50 stores following the debut of the Z10 at last week’s media event in New York; the phone went on sale in the U.K. the next day, and in Canada this week, with RIM yesterday saying that it had its best product debut ever in Canada, based on initial order patterns.

Misek found that “half of the stores were sold out” in Canada, with Toronto and Vancouver stores In Toronto and Vancouver most of the remaining stores only had limited stock (generally a few white Z10s) with more stock available in the Prairie provinces.” Best Buy (BBY) stores in Canada had a “hugely successful launch,” he cites the chain as saying.

In contrast to a report yesterday from Canaccord Genuity’s Mike Walkley, who said that Z10 supplies were limited to 15 units in most stores, Misek thinks supplies were generally higher than that:

BBRY: ‘Solid Demand’ for Z10, Says Jefferies; Margins Can Rise, Says Wells - Tech Trader Daily - Barrons.com

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Wait.......their's more

Wells’s Um today writes he upgraded the stock based on a belief that “gross margin will improve as the mix of BB10 devices ramps and the existing BB7 portfolio (negative gross margin) declines.”

Um is modeling sales of the Z10, and of the forthcoming QWERTY “Q10″ model, to sell perhaps 1.5 million units in its first quarter, based on having signed up 13 carriers. He thinks that compares quite favorably with new product introductions by Palm, which had 720,000 in sales of its “Pre” smartphone when it came out in 2009 on Sprint-Nextel (S), and Motorola, now part of Google, with its “CLIQ/Droid,” which sold 2 million units. There could even be higher sales than he’s expecting, and every 100,000 additional Z10 units sold adds another 2 cents to BlackBerry’s EPS, he writes.

Despite lots of challenges and “unknowns” for BlackBerry, writes Um, sales of Z10 with a higher profit margin will lift overall company gross margin:

Head over to the link for the full story: BBRY: ‘Solid Demand’ for Z10, Says Jefferies; Margins Can Rise, Says Wells - Tech Trader Daily - Barrons.com

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Wow the weasel has come out of his hole. I thought groundhog day had passed already