NEW YORK (TheStreet) -- BlackBerry (BBRY) is becoming a different company under CEO John Chen than it was under former CEO Thorsten Heins, as it moves away from devices. With the added emphasis on services, enterprise and messaging, Wall Street is starting to take notice. However, the company isn't out of the woods just yet.

Oppenheimer analyst Ittai Kidron has upgraded shares of Waterloo, Ontario-based BlackBerry to "perform" from "underperform," noting that under Chen, BlackBerry is changing itself to focus more on enterprise, but the next few quarters may be rocky. "We continue to see a tough and long road ahead for BlackBerry as it pursues its enterprise-focused

transformation and we wouldn't be surprised by poor results and missed milestones," Kidron wrote in his note. "However, the initial euphoria around CEO John Chen's strategy has subsided and we believe the hard reality has sunk in with investors who are now more negatively biased for a large gap in 2014 and more realistic asset valuations. We see better SoP support around $7 from immediate value in QNX and IP and potential in messaging and enterprise. And as BlackBerry moves further away from devices and shows progress in enterprise, investors could see value in assets limiting downside."

Kidron notes BlackBerry's most valuable assets are its patents, the QNX operating system, BBM, its position in enterprise, as well as its $1.96 a share in cash. Given the recent hoopla surrounding messaging apps such as WhatsApp, which Facebook (FB) - Get Report recently announced it was acquiring, BBM could have some upside to it. BBM ended the quarter with 115 million users, of which 85 million are monthly active users.

Shares of BlackBerry were were slightly higher in pre-market trading, gaining 0.82% to $7.34.

Following the company's fiscal fourth-quarter earnings report which saw the company report a loss of 8 cents a share on $976 million in sales, compared to the loss of 67 cents a share on $1.13 billion analysts were expecting, Kidron believes reality has set in for BlackBerry. The initial euphoria surrounding Chen, who helped lead the turnaround at Sybase before selling it to SAP (SAP) - Get Report a few years ago, is over, and reality is sinking in. In the fourth quarter BlackBerry burned through $800 million in free cash, leaving it with $2.7 billion in cash and cash equivalents, so the company's balance sheet is in a weaker position than it had been previously.

Given that and several other facts, investors should begin to focus on the fact BlackBerry is no longer a device first company, though it continues to come out with new devices, such as the upcoming Z3, and the Q20 BlackBerry Classic, which is coming in November. Kidron believes that as inventory gets closer to normal and these new products are introduced, there could be a potential temporary lift to device sales.

Chen took over from Heins in November, and since then he and his management team have done a good job of cutting the company's expenses - $246 million in the fourth quarter alone, Kidron notes. However, it's time to focus more on the turnaround. "Management's done a good job cutting expenses ($246M in 4Q14 alone), and more dramatic cuts could be made without comprising effectiveness as BlackBerry becomes software driven," Kidron wrote in the report. "This should help it preserve cash and extend the time it has to pursue a turnaround."

--Written by Chris Ciaccia in New York

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