BlackBerry (BBRY) has been a hot stock to follow recently. So, as I normally do, I started my day off on StockTwits, reading through the BlackBerry (BBRY) stream and other tech streams to see what was going on. The first thing that popped out to me was the fact that Goldman Sachs downgraded BlackBerry (BBRY) to a sell. I thought to myself, “What happened?” I thought the stock was gearing up for a rally. However, as I dug more and more, the downgrade seemed more and more fishy. So, today, we’ll talk about why Goldman Sachs downgraded BlackBerry (BBRY), other analysts that have opposing opinions, and why I think the downgrade was completely unfounded. So, let’s get right to it.
Why Goldman Sachs Downgraded BlackBerry (BBRY) Stocks
Any time I see a downgrade, the first thing I do is research to try and find out why. However, that’s when things got a bit interesting with this particular downgrade. There are several mainstream websites including Street Insider, 24 7 Wall Street, and more have picked up the story. However no one seems to be reporting why Goldman Sachs downgraded BlackBerry (BBRY); all they seem to be reporting is that it happened. With that said, I’ll be scouring the web to see what I can find throughout the day, but so far, it looks like reasons for the downgrade may not be as wholesome as we would expect.
Update 9:03 – Street Insider reports that the analyst had the following to say….
“We think the success of BlackBerry’s turnaround hinges on its ability to grow its Enterprise Mobility Management (EMM) software business, where competitors include Mobile Iron, Airwatch (part of VMware), and Good,” said Jankowski. “BlackBerry has set a target of $500mn in Software segment revenues for FY16(Feb), up from $250mn in FY15. We expect it to fall well short of that target and model revenues of $426mn, for two reasons. First, our surveys show very low buying intentions for BlackBerry’s EMM solution. Second, its target implies that it would leapfrog the market leaders in just one year, which we view as unlikely given the competitors’ much better traction (based on our survey).”
While we finally have reasoning, I’m still not sure that the analyst is making the right decision, and I think there still may be some other reason for the downgrade.
What Other Analysts Have To Say About BlackBerry (BBRY) Stock
Goldman Sachs isn’t the only organization who has changed their rating for BlackBerry (BBRY) stock; which makes this an even more interesting occurrence. While Goldman Sachs downgraded the stock to a sell and set a price target at $9, other analysts seem to have opposing opinions. As a matter of fact, Vetr analysts weighed in on Friday, upgrading the stock from a “sell” to a “hold” with a price target of $13.51 per share. On February 17th, Cowen and Company also decided to upgrade BlackBerry (BBRY) stock recently; giving the company a “market perform” rating and raising the target price from $9.00 per share to $10.00 per share. These aren’t the other two analysts that have upgrade the stock either. Going back to January, I was able to find 4 instances in which a trusted organization has upgraded BlackBerry (BBRY) stock.
Is The BlackBerry (BBRY) Stock Downgrade Completely Unfounded?
In my opinion, the answer is yes! When I research a topic, I’m sure to be thorough in the process. While I was researching this topic however, I couldn’t find one trusted website that mentioned a reason for the downgrade. That in itself is a big red flag as downgrades usually come with interviews, statements from the analyst, and more; but, those things seem to be missing this time.
As I became more puzzled with the “Why?” I decided to look at what other analysts were saying about the company. In doing so, I was able to find several recent upgrades, but not one recent downgrade (other than Goldman Sachs of course). The thing is…the upgrades all came with clear, concise reasons as to why the changes were made. That wasn’t the case with regard to the downgrade. While I will continue and search for the reasoning Goldman Sachs had for the downgrade, I’m starting to believe more and more that it may have been to protect the shorts (a fact that I simply don’t want to accept).
What Are Your Thoughts?
Do you think BlackBerry (BBRY) deserved the downgrade from Goldman Sachs? Why or why not? Let us know in the comments below!