The Latest Analyst Downgrade Is a Buy Opportunity in BlackBerry Stock
As you might be aware, BlackBerry (NYSE:BB) was caught up in the “meme stock” craze of the past few weeks. The upshot was a precipitous rise and fall of BB stock, resulting in massive gains for some traders and staggering losses for others.
The volatility in the stock even seems to have caught InvestorPlace contributor Josh Enomoto by surprise. He’s down on his BlackBerry position, and of course he’s not the only one.
Admittedly, being caught up in the ongoing r/WallStreetBets news story makes BlackBerry seem more interesting. The stock certainly caught the interest of one prominent Wall Street analyst.
However, that analyst’s assessment wasn’t entirely favorable. Nevertheless, a deeper analysis might uncover some reasons to like BlackBerry now — including some nuggets from a seemingly bearish-leaning commentator.
BB Stock at a Glance
Before the Reddit crowd focused their attention on BB stock, the share price couldn’t seem to stay above $5 most of the time.
There was a moderate ramp-up at the end of 2020, with the share price closing at $6 and change on the year’s final day. Yet, that was nothing compared to the rally that would happen in January.
With r/WallStreetBets users and other market participants bidding up the share price, BB stock catapulted all the way up to a stunning 52-week high of $28.77 on Jan. 27.
Generally speaking, it’s not a great idea to chase stocks after they’ve gone vertical. This stock provides a textbook example of this principle in action.
After the peak, the BlackBerry share price tumbled, landing slightly above $10 on Feb. 26. This isn’t necessarily a bad thing if you had the patience to wait for the Reddit-fueled hype phase to pass.
I alluded earlier to an analyst who might be giving mixed signals on BB stock. He’s Canaccord Genuity analyst T. Michael Walkley, who recently downgraded his rating on the stock from “hold” to “sell.”
At the same time, Walkley walked his price target up from $8 to $10. You must admit, Wall Street commentators can be confusing sometimes.
Walkley admits that the company’s “management has created a cogent long-term strategy and the business is turning the corner toward stronger trends.”
Moreover, Walkley concedes that BlackBerry has “made positive strides…creating a compelling cybersecurity platform.” This is an important point. Investors should understand that BlackBerry has shifted its focus away from old-fashioned phones.
On top of all that, Walkley believes that BlackBerry’s software and services revenues will resume positive growth in 2021.
Put This on Your Radar
So, what is Walkley’s issue with the stock? Evidently, the analyst downgraded BB stock to a “sell” rating “based on the current valuation despite … [his] belief [that] trends in the model should gradually improve.”
Heck, there was even a compliment in that comment. It sure seems like Walkley has a favorable outlook overall on BlackBerry.
I can understand it if a Wall Street analyst might be deterred from recommending BlackBerry shares after the r/WallStreetBets mania. Not everyone wants to get involved with that.
But like we explained earlier, the BlackBerry share price is much lower than it was during the Reddit hype phase. The mania seems to have passed, and after the dust settles, there’s a company with turnaround potential.
For instance, the company just revealed enhancements to the BlackBerry Radar H2 wireless monitoring devices. The new H2 features an enhanced online end user dashboard as well as the data-enriched Events 2.0 Alerting System.
BlackBerry isn’t the world’s favorite phone maker anymore. However, the company is picking up the slack in other tech-enabled niches, as demonstrated with the new Radar H2.
And if there’s an analyst that has mixed feelings regarding BB stock, so be it. As long as BlackBerry’s making positive strides, there’s room for the stock to run.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.