Cite the name "BlackBerry" (TSX:BB) and many will still talk about the company’s former glory in the smartphone space. That rocky past is not what is holding the stock back. After falling 5% last week, 15% in the month and 26% in the quarter, the stock faces plenty of near-term selling pressure. The multi-year transformation into software is slow. BlackBerry’s biggest deal yet – buying Cylance – will work out strategically. So, why not buy BlackBerry stock as the stock touches new lows?
Investors should wait for the company’s earnings report scheduled for December 20 (Thursday) before buying or selling the stock. Expectations are still high that its results will justify valuation that is 51% above the closing price. Per Tipranks, the average price target is $11.50. In November, short interest rose to 30.89 million shares, up from 25.5 million in Oct. 30.
After the drop, bears have more to lose if BlackBerry beats on revenue. Its MDM server software should continue growing. Profit margins may expand as BlackBerry cross-sells enterprise mobility apps that enhance security and privacy. Conversely, orders may drop as companies watch out for an economic slowdown and hold off big software purchases until the next fiscal year. That would send BB stock well-below $7.00 a share, since the stock currently trades at a 48 times forward P/E.
