BlackBerry has been downgraded by stock analysts at Canaccord Genuity from a “hold” rating to a “sell” rating. , Michael Walkley from Canaccord downgraded BlackBerry with a price target of $10.00.
Walkley recommended investors sell, as prices have rallied too much recently to justify the improvement seen in the company’s security software business.
Walkely said he believes BlackBerry has made positive strides integrating its Cylance artificial intelligence-based products to create a “compelling” cybersecurity platform. He expects a “gradual software and services recovery,” with revenue returning to positive growth this year as sales to the automotive market should improve.
BlackBerry reported in December fiscal third-quarter revenue that fell 20% from a year ago, and the current FactSet consensus calls for revenue for fiscal 2021, which ends this month, to fall 14.3%. But fiscal 2022 revenue is expected to rise 10.3%.
Based on his recovery view, Walkley raised his price target by 25%, to $10 from $8. But that new target is still 17.8% below current levels, and he cut his rating to sell, after being at hold for at least three years.
“With the volatility in the shares following recent unusual trading activity from a targeted short squeeze, the share price is above our increased price target, resulting in our downgrade to sell,” Walkley wrote in a note to clients.
Even though the stock has pulled back sharply from its “Reddit driven rally” to its January high, “our analysis leads us to believe the shares are still overvalued,”