Drop In BlackBerry Ltd (NASDAQ:BBRY), Energy Stocks Takes TSX To 5-Week Low


On Monday, the main stock index for Canada witnessed a sharp decline owing to the drop in the value of the energy stocks lead by lower oil prices, and a fall in BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) following a downgrade by Goldman Sachs.

Energy stocks down

Overall, the energy sector dropped 1% owing to the continued weakness in crude prices while BlackBerry stock dropped by 5.5% to C$12.70.

Rick Hutcheon, president and chief operating officer at RKH Investments told Reuters, “We are still concerned about how Canada is going to weather the energy storm. We just have to get ourselves through this.” Hutcheon added that if energy sector witnesses a month or two of relative stability, then the sector could see a spike in the M&A activity.

Toronto Stock Exchange’s S&P/TSX composite index declined 57.05 points, or 0.38%, and all ten of the important sectors on the index witnessed a decline. Among the energy stocks, Suncor Energy was down 0.7% to C$36.67 while Encana Corp wad down to C$14.63.

A sharp decline on Monday follows a selloff on Friday, when a positive U.S. jobs data raised concerns that the Fed may soon raise interest rates. So far this month, TSX is down around 2.3%.

Loss to widen for BlackBerry

On Monday, Goldman Sachs analyst Simona Jankowski lowered her rating on BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) from Neutral to Sell, and slashed the price target from $10 to $9. According to Jankowski, despite the recent success the Canadian firm has enjoyed, it will be tough for the company to move from cuttings costs to growing revenue. Also, Jankowski expect the loss to widen for BlackBerry in fiscal 2016 and 2017.

Goldman Sachs analyst gave two reasons backing her expectation of widening losses. First, survey done by her suggest a low demand for the BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s EMM solution, and secondly, “its target implies that it would leapfrog the market leaders in just one year, which [she] view[s] as unlikely given the competitors’ much better traction (based on our survey).”

Jankowski expect hardware revenues to come strong, but sees them as “empty calories” as they are not profitable. Therefore, owing to fewer high-margin Software and Services revenues, analyst expect the loss to widen for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB).