The Motley Fool

Will BlackBerry Ltd Shares Slump to $6?

While Fools should generally take the opinion of Wall Street with a grain of salt, it’s not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades — just in case their reasoning behind the call makes sense.

What: Shares of BlackBerry Ltd (TSX: BB) slipped 2% on Thursday after Societe Generale downgraded the wireless solutions technologist from hold to sell.

So what: Along with the downgrade, analyst Andy Perkins reiterated his price target of U.S. $6.00, representing about 34% worth of downside to yesterday’s close. So while momentum traders might be attracted to BlackBerry’s rebounding share price in recent months, Perkins’ call could reflect a growing sense on Bay Street that its valuation is becoming a bit stretched.

Now what: According to SocGen, BlackBerry’s risk/reward tradeoff is rather unattractive at this point. “The new handset (the Blackberry ‘Jakarta’) will launch in April and so will have no impact on the historical results,” said Perkins. “Additionally, we forecast that Services revenues will also be down almost 13% sequentially as subscriber accounts continue to fall.”

Of course, with BlackBerry shares still off about 40% from their 52-week highs, that downbeat short-term view might be providing tech-savvy Fools with a solid long-term entry point.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.