Apple and BlackBerry: Battle of the Fruits Abroad

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Morgan Stanley has high hopes for BlackBerry’s (NASDAQ:BBRY) stock, but Apple (NASDAQ:AAPL) may quash some of that hope as it moves into foreign markets with more strength.

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Last week, Morgan Stanley analyst Ehud Gelblum upped his price target on BlackBerry’s stock from just $10 to $22, alongside a rating shift from Underweight to Overweight. But, Gelblum’s assessment hinged on BlackBerry’s ability to sell devices, and specifically to sell them at a higher average selling price than it had with previous devices. This will depend heavily on continuous demand for BlackBerry’s latest devices.

Gelblum’s model predicts that the company will sell 36.4 million smartphones over the year at an average selling price of $285.30 — these values are up from previous estimates of 31 million units and an ASP of $260.80. This would bring total annual revenue up to $13.92 billion from $11.62 billion, and boost profit to $0.23 per share from a previously projected loss of $1.37 per share.

However, some trouble could arise in South and Southeast Asia. Apple is an unforgettable name in the smartphone market, and its worldwide presence is well on top of BlackBerry’s. Though Apple was surpassed by Samsung (SSNLF.PK) in global sales, it still has a lead on BlackBerry that it could further expand.

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Apple is currently pushing into India, and it’s doing so with a new installment plan for purchases, which could make the expensive iPhones more affordable in India’s emerging smartphone market. Affordability could prove to be difficult for BlackBerry to beat, as it would have to compete on price points, which could drive down that average selling price on which Gelblum based his price target increase.

BlackBerry has slid a long way since the introduction of Apple’s iPhones, and continued pressure from the leading smartphone manufacturers could give BlackBerry trouble climbing out of the rut it has fallen into as its global ranking steadily declined.

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