BlackBerry is expected to report results on April 1st 2016. Analysts are anticipating revenue of $563.18 million and EPS of $-0.09. I’m starting to get more upbeat on the company despite deafening skepticism by the analyst consensus. Assuming, software licensing starts to inflect significantly higher, the stock will likely rally from the present base of $7.87. In its Q3’16 earnings conference call, BlackBerry reiterated its guidance of $500 million for software licensing revenue. Since enterprise software sales tends to be Q1’ and Q4’ loaded, I believe there’s a reasonable likelihood that BlackBerry will surprise to the upside on software. On the hardware front, I’m a little less excited but anticipate a much lower break-even point for unit shipments than what management broadly reports as their actual unit break-even. I believe that if BlackBerry can sell 1.717 million incremental Priv units, the entire business will reach break-even after calculating relevant costs. Morgan Stanley maintained their equal weight rating in their most recent note leading up to earnings: Pulling forward devices revenue on Priv launch momentum. Our 4Q16 and FY17 revenue / EPS estimates are now $569mm / ($0.13) and $1.90bn / ($0.68) from $535mm / ($0.13) and $1.93bn ($0.68) respectively. The slight downtick in FY17 revenue estimates represents a pull forward in Priv revenue after changing recognition to a sell-in basis. Remain EW with a $7PT, but continuation of devices business warrants additional caution. Our $7 PT is 4-5x our forecast for a ~$600mm/yr software and messaging business and ~$2.50/share in net cash. Management’s plan to develop an additional Android handset and insufficient organic software revenue growth may reduce the ability to improve net cash position through cost cutting. I believe the stock is intrinsically worth more than Morgan Stanley’s estimate. And while, there are risks to buying BlackBerry, I believe there’s enough visible evidence that software will continue to grow at a relatively high run rate. Perhaps software can reach $1 billion/year given a couple years, which reduces hardware dependency, which is a low margin/high risk business at present unit levels. The real theme to watch for coming out of BlackBerry’s upcoming earnings report is guidance on software revenue. If it can offset the decline in SAF (software access fee) revenue, the company is in a relatively solid position to inflect much higher. However, BlackBerry has struggled in the past couple years, as it hasn’t demonstrated the capability to sustain healthy enough growth rates across its business units. I have written about this transition extensively and in many instances I have been wrong. However, given enough time I’m fairly confident that software revenue will offset the declines in SAF. I project that the legacy SAF business unit will decline from $782.44 million to $397.54 million in FY’17, whereas software licensing will grow to $835.47 million from $545.33 million in FY’17. Clearly, the software revenue is the biggest question coming out of the quarter, as the range of estimates for the unit are quite broad. I have modeled a relatively conservative scenario of 35% y/y growth, but then again other analysts have forecasted single-digit growth for the segment. The licensing revenue from QNX is extremely unpredictable, which makes it more difficult to model software revenue going forward. However, given the potential market opportunity in software and the rapid growth of the business in the past couple quarters I’m starting to get a little more aggressive here. I continue to reiterate my contrarian buy-focus on BlackBerry. Yes, I’m recommending this company and I don’t have the blind folds on. I think analysts are a little too conservative on software revenue estimates, which points to a pattern of significant earnings/sales beats given enough time. Furthermore, the stock is extremely inexpensive and trades below my current 12-month price target, so there’s reasonable upside assuming the stock reaches my price target of $12.86.