Is BlackBerry Well-Positioned for the Future?

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With shares of BlackBerry (NASDAQ:BBRY) trading around $10, 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 CEO John Chen told CNBC in an exclusive interview that if someone were to offer him a huge sum for BlackBerry Messenger, he would take the cash. “I work for the shareholder. Standard answer. If someone comes to me with $19 billion, I would definitely sell it. I would recommend to the board to take it,” Chen said. The CEO was asked about BlackBerry’s BBM service on the heels of Facebook’s (NASDAQ:FB) $19 billion purchase of popular messaging platform WhatsApp, announced last week.

T = Technicals on the Stock Chart Are Mixed

BlackBerry stock has struggled to make positive progress in the last several years. The stock is currently trading sideways and may need time to consolidate. 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 above its rising key averages, which signals neutral to bullish 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

71.58%

50%

48%

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

Put IV Skew

Call IV Skew

March Options

Flat

Average

April Options

Flat

Average

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

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

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