The world of investing seems to have been turned on its head of late. Indeed, investing in technology stocks such as BlackBerry (TSX:BB)(NYSE:BB) suddenly doesn’t appear to be as simple as it once used to be. BlackBerry stock is one that’s certainly been on a wild ride of late.
As a company that has gotten swept up in the meme stock mania earlier this year, shares of BlackBerry have been more volatile than the vast majority of Canadian stocks. Accordingly, many long-term investors may not want to touch this company over the fear of volatility.
That said, there may indeed be reasons to own this company, depending on one’s outlook. Let’s dive into what the experts think about where BlackBerry could be headed from here.
Analysts in conflict on BlackBerry stock
BlackBerry stock is one of those difficult stocks to ascertain a value for. Indeed, even analysts are disagreeing on the quality of the company’s underlying business model and long-term growth prospects.
In fact, analysts are all bearish on BlackBerry stock right now. Out of the four analysts covering the company, all have assigned a sell rating to this stock.
Of course, a significant reason for this is the company’s current valuation. Due to BlackBerry’s rise to prominence among retail investors, BlackBerry now enjoys a valuation of more than 9-times sales, despite still being in turnaround mode. The company’s not yet profitable, and questions remain as to the ability of BlackBerry to get back in the black over the medium-term.
These objections to BlackBerry’s current stock price are notable. And investors should certainly heed these concerns with caution.
However, the question for investors interested in BlackBerry stock is whether this company can potentially grow into its valuation. That’s where things become a bit trickier.
Growth prospects remain strong
BlackBerry’s ability to grow is directly correlated to the success of the company’s core software business. After all, BlackBerry’s hardware and patent businesses have been in decline for some time. Investors shouldn’t rely on these segments to generate much in the way of top or bottom-line performance over the long term.
That said, the company’s core QNX operating system is the bread and butter driving BlackBery to the future. With key partnerships such as those of Amazon in developing the company’s IVY platform, there’s once again hope for BlackBerry. Indeed, should IVY take off in the same way as QNX has in the auto sector, BlackBerry could actually prove to be at a pivotal point in its life cycle right now.
I’m an inherent optimist, for good and bad. In the case of BlackBerry, there are actually fundamental drivers underpinning a rather solid growth thesis with this stock. Accordingly, while BlackBerry’s valuation remains high, I’m seeing higher in the market right now for comparable companies lacking profits. Accordingly, I’m of the opinion investors shouldn’t ignore BlackBerry altogether at these levels.
BlackBerry certainly has a lot of work to do to justify the company’s current valuation. However, I think BlackBerry remains an intriguing highly speculative tech play long-term investors may want to consider.
That said, waiting for a better entry point may be well-rewarded here. This is a stock that’s not yet at a valuation that screams “buy.” That said, I’ll be looking at this stock in the single digits.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Chris MacDonald has no position in any stocks mentioned in this article. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends BlackBerry and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon.