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BlackBerry Stock Is Hit With a Downgrade. Shares Are Sliding.

A BlackBerry smartphone.

Angel Garcia/Bloomberg

BlackBerry stock this year has received a short-squeeze powered boost, supercharged by the same group of Reddit readers that drove the now fading mania in GameStop stock.

BlackBerry (ticker: BB) stock, which ended 2020 at $6.63, closed as high as $25.10 on Jan. 27, and has since dropped roughly in half. The decline might not be over.

Canaccord Genuity analyst T. Michael Walkley on Tuesday cut his rating on the stock to Sell from Hold, but raised his price target to $10 from $8.

Once a leading producer of mobile phones, BlackBerry is now mostly a security-software company. Walkley writes in a research note that the company has “made positive strides…creating a compelling cybersecurity platform.” And he thinks the company’s software and services revenue will resume positive growth in 2021. His new price target is based on a revised valuation target of five times his estimated 2023 sales target, up from a previous model that used a valuation of four times sales, reflecting improving fundamentals.

But the analyst also said that the recent short-squeeze-driven volatility in the stock has left BlackBerry stock above his new target. “While we believe management has created a cogent long-term strategy and the business is turning the corner toward stronger trends…we downgrade to Sell based on the current valuation despite our belief [that] trends in the model should gradually improve.”

BlackBerry stock on Tuesday is down 5.4%, to $12.34, but still up 86% year to date.

Write to Eric J. Savitz at [email protected]

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