Analyst Upgrade Highlights the Reassessed Prospects of BlackBerry Stock

Daily Trade

It’s no exaggeration to say that BlackBerry (NYSE:BB) is a completely different company than it was in the first decade of the 2000s. Prior to the Great Recession, it felt as if BB stock would just keep going up forever.

the BlackBerry logo presented on a white background

Source: Shutterstock

Today, though, it’s almost humorous to think that BlackBerry once held a leadership position in the mobile phone industry. Years ago, the company lost its market share after hesitating to include touchscreen displays in its products.

Nevertheless, BlackBerry is still in business — but it is a very different business. BB is a software company now, with some supporters but also plenty of detractors.

At least one prominent Wall Street expert, however, seems to somewhat envision a positive growth story for this company. In fact, his upgrade might even cause some investors to consider a long position.

A Closer Look at BB Stock

In 2021, there has been some evidence that social-media traders have been targeting BB stock for short squeezes.

Back in January, meme-stock mania was in full effect. Reddit users were pushing unloved names to dizzying heights, but only temporarily. As such, it’s probably not a coincidence that BB stock went from around $6.50 at the beginning of the year to nearly $29 on Jan. 27. By May, the stock had fallen back down to $8.

The timing of that rally and the subsequent retracement both point to Reddit. There was also another similar price spike in early June, which briefly took the stock up to $17.

Unfortunately, though, that rally also fizzled out. By the end of August, BB stock had declined to the $10 to $11 range. At the same time, BlackBerry also now has a trailing 12-month (TTM) earnings per share (EPS) of -94 cents.

That negative number might dissuade some cautious investors from buying shares. Yet, historic EPS of -94 cents isn’t too terrible with the stock around the $10 mark.

Reversing the Downgrade

So, perhaps there are reasons to believe that BlackBerry can get itself into a positive earnings position in the near future. And apparently, Canaccord Genuity analyst T. Michael Walkley is brightening his outlook on BB stock as well.

Walkley recently upgraded BB stock to a “hold” rating. This is particularly noteworthy because he had downgraded BlackBerry to “sell” just back in late June. Walkley had cited “recent sharp appreciation in the share price” as reason for the previous downgrade.

Walkley seems to have been alluding to the June rally here, which may have been precipitated by meme-stock traders. With the share price returning to Earth now, though, a reassessment is in order — and that reassessment may mean good things for this stock.

Turning the Corner

Don’t get the wrong idea here. I’m not saying that Cannacord is massively bullish on BlackBerry. Walkley kept his modest $10 price target on BB stock. With the shares recently trading around that mark, the analyst isn’t implying any upside from here.

Still, though, there are reasons to maintain a bullish outlook on BlackBerry for the long term.

For one, it’s encouraging to witness the company taking proactive steps to evolve, from an out-of-touch phone maker into a competitive software business. Plus, the company is seeking a buyer for its phone-related patent portfolio. If and when the company finds that buyer, it could see a sizable capital infusion.

Walkley commented that BlackBerry seems to be “turning the corner,” while suggesting that the company’s “management finally has a cogent plan in place to grow its security practice.” However, he clarified that its plan “should only accelerate through additional capital if a deal is reached to sell its licensing business.”

The Bottom Line on BB Stock

All in all, it’s fascinating to witness BlackBerry morph into a different business than it was all those years ago in the early 2000s. But only time will tell whether it will successfully evolve into a purveyor of security-focused software.

That said, although Cannacord’s reassessment of BB stock isn’t massively bullish, it at least seems to suggest the shares will maintain their value for a while. That should pique your interest as we head into the last months of the year.

FREE REPORT: 17 Reddit Penny Stocks to Buy Now
Thomas Yeung is an expert when it comes to finding fast-paced growth opportunities on Reddit. He recommended Dogecoin before it skyrocketed over 8,000%, Ripple before it flew up more than 480% and Cardano before it soared 460%. Now, in a new report, he’s naming 17 of his favorite Reddit penny stocks. Claim your FREE COPY here!

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

Articles You May Like

Top Wall Street analysts pick 3 stocks for their attractive prospects
Small Caps: Unexpected Outperformance Could Drive Gains in a Hurry
These economists say artificial intelligence can narrow U.S. deficits by improving health care
How GE Vernova plans to deploy small nuclear reactors across the developed world
The AI Stocks Poised to Dominate the Market by 2025