Morgan Stanley Initiates Coverage on BlackBerry

In a note released Wednesday morning, Morgan Stanley analyst James Faucette initiated coverage on BlackBerry Limited BBRY with an Equal-weight rating. At this time he has not set a price target for the company. In the mid-term, Faucette says BlackBerry's balance sheet will benefit from cash coming from tax rebates and the sale of real estate. However when looking out over the long-term, Faucette wrote, "We are skeptical," he added, "The company faces an uphill battle to regain the market position it once had." As the company moves forward, Faucette noted that BlackBerry's new CEO John Chen plans to transition the company into a software-centric company. To fund the transition, Faucette noted, BlackBerry is raising cash through a $1.25 billion convertible offering, $0.5 billion in expected tax returns, and $300 millionin other asset sales To conclude, Faucette acknowledged that he is slightly above consensus. He explained this is due to his conviction that Chen will "aggressively" cut costs to preserve assets.