BlackBerry cuts smartphone production again: analyst

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Inside the Market's roundup of some of today's key analyst actions. This post will be updated with more analyst commentary during the trading day.

BlackBerry Ltd. has cut back production of its BlackBerry 10 smartphone devices by at least another 10 per cent after having sliced their monthly output in half just a month ago, according to Jefferies analyst Peter Misek.

He also said there was only "very modest demand" for the new Q5 smartphone as it came on sale in Canada last week.

Mr. Misek cited Jefferies' own channel checks for the findings. A month ago, Mr. Misek created a stir by saying BlackBerry 10 builds for the Z10 and Q10 devices were cut in half to 1 million units per month.

"We believe the build plan cut indicates sell-though is tracking well below the Street's $3.1-billion revenue estimate," Mr. Misek said in a research note. "Our Canada store checks indicate the Q5 launch is off to a slow start and Q10 prices have started to get cut."

The Q10 was the company's first QWERTY keyboard phone to use the BlackBerry 10 operating software, and Mr. Misek noted Bell Canada recently reduced its price to $149 from $199 under two-year contracts. The discounting is in line with price reductions this summer for several Android devices. The Q5 is a less expensive and less powerful version of the Q10.

"After the Wednesday, Aug. 14 launch of the Q5 in Canada, we contacted dozens of Canada carrier stores (Telus and Bell) and also Future Shop (similar to a Best Buy). Our survey indicates very modest demand across the three different stores and different cities. Most stores indicated that it was a soft launch, and not a big event like the launch of the Z10 and the Q10. Most stores did not receive a large amount and some had not sold any. A few stores, particularly Future Shop locations, have not yet received any Q5 devices," Mr. Misek said.

Mr. Misek said he saw "significant risk" to consensus estimates for the company over the next couple quarters and cut his outlook further below Street forecasts.

Even though he reduced his price target on BlackBerry, he maintained a "buy" rating, believing the market will take the weaker-than-expected results in stride due to the potential for a possible leveraged buyout of the company or an acquisition of parts of the firm. The company last week said it had set up a committee to explore strategic alternatives, including joint ventures, partnerships or a sale of the company.

He also thinks there is "pent up" demand from the enterprise market for the BlackBerry 10 handsets, thanks in part to an improved web browsing experience. That said, enterprises may delay purchases until they have greater clarity on BlackBerry's future as a company, he said.

"If missing near-term consensus estimates and the volatility caused by BBRY's strategic review does not reduce an acquirer's long-term view of BBRY's value, we think the stock can move higher from here," he added.

Target: Mr. Misek cut his price target to $15 (U.S.) from $18. The average target among analysts is $10.35, according to Bloomberg data.

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Piper Jaffray analyst Gus Richard upgraded Intel Corp. to "neutral" from "underweight," believing the company will see revenue growth next year thanks in part to a refresh to Microsoft Windows 8.1 software.

He also thinks Intel's tablet processor, known as Bay Trail, holds promise and could help Intel gain market share in tablets.

Target: Mr. Richard raised his price target to $22 (U.S.) from $20. The average target is $24.17.

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BMO Nesbitt Burns analyst Dan McSpirit hit Southwestern Energy Co. with a downgrade, cutting its rating to "market perform" from "outperform."

With relatively flat production in Arkansas in the Fayetteville shale gas play, Mr. McSpirit doesn't see much upside potential in for the company's stock in the near term.

"In the context of growth, the stock doesn't look cheap today or much less expensive tomorrow, is our conclusion," said Mr. McSpirit.

With Southwestern's focus on natural gas, its stock is basically a "proxy for the commodity," he added.

"Great company, just not a great stock at this time, in our view," said Mr. McSpirit.

Target: Mr. McSpirit lowered his price target to $40 (U.S.) from $42. The average target is $44.68 according to Bloomberg data.

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Boardwalk REIT's solid showing last quarter has Raymond James analyst Ken Avalos maintaining his "outperform" rating for the company.

The REIT is set to finish up its Spruce Ridge Gardens development in Calgary and also has another development ready to start in Regina and is currently looking into the potential of three other properties, he added.

"Additionally, the company has significant financial flexibility given its low asset leverage," said Mr. Alvos.

Target: Mr. Alvos lowered his price target to $65 down from $70. The average target is $66.79.

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RBC analyst Stephen Walker downgraded Lake Shore Gold Corp. to "underperform" from "sector perform," citing the stock's recent price appreciation.

While blended gold grades from the company's operations near Timmins, Ont., improved in the second quarter, they still have yet to meet the 5.2 grams per tonne that the company has targeted.

Mr. Walker is optimistic that Lake shore should be able to hit that target. If it doesn't, that could hamper the company's ability to repay its fully drawn line of credit, he warned

Lake Shore also needs to ramp-up production in order to achieve its 2013 guidance, noted Mr. Walker.

Target:  Mr. Walker lowered his price target to 60 cents from 70 cents. The average price target is 67 cents.

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities