Will BlackBerry Head Higher After Recent Headlines?

With shares of BlackBerry (NASDAQ:BBRY) trading around $7, is BBRY an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

BlackBerry is a designer, manufacturer, and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software, and services, it provides platforms and solutions for seamless access to information such as email, voice, instant messaging, SMS, Internet, intranet-based applications, and browsing. Its products and services feature the BlackBerry wireless solution, the Research In Motion Wireless Handheld product line, the BlackBerry PlayBook tablet, software development tools, and other software and hardware.

BlackBerry’s Chief Executive Officer John Chen said the chances of turning around the struggling smartphone maker have risen to 80-20. Chen, who was named as BlackBerry’s top executive in November, had previously been placing the recovery odds at 50-50, no better than a coin flip. “We have a lot of problems, but it’s not dead,” Chen said Wednesday at Re/code’s Code Conference in Rancho Palos Verdes, California. “I am quite positive that we will be able to save the patient.”

Chen has been working to shift the Waterloo, Ontario-based company’s focus from smartphones to mobile data and security services. Since his arrival, BlackBerry has pushed to have a bigger role in connecting everything from heart monitors to automobiles to the Internet as mobile service spreads beyond phones and tablets.

T = Technicals on the Stock Chart are Mixed

BlackBerry stock has struggled to make positive progress in the last several years. However, the stock is currently surging higher and looks set to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, BlackBerry is trading slightly below its rising key averages which signal neutral to bearish price action in the near-term.

BBRY

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of BlackBerry options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

BlackBerry options

57.59%

26%

24%

What does this mean? This means that investors or traders are buying a small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

June Options

Steep

Average

July Options

Steep

Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.