One by one the big firms are coming over to the BlackBerry (BBRY) camp, after having realized that the company is not going out of business after all. The latest upgrade comes from Morgan Stanley, that upgraded BlackBerry from a sell to a buy rating with a price target of $22 per share from a previous $10 per share price target.
What is interesting are the catalysts mentioned by Morgan Stanley:
The move is based on adoption of BB10 expanding gross margins and increasing average selling prices. This even assumes a lower service attachment rate and low assumptions on sales numbers.
So after Goldman Sachs, who upgraded BlackBerry with a price target of $19 per share, BlackBerry gets another very prestigious upgrade, this time from Morgan Stanley, but with a higher price target.
I am not sure what short sellers are thinking, but having two of the biggest Wall Street firms against you are not very good odds.
Another short-term catalyst (AKA reason to squeeze the shorts) for the stock is the fact that on March 28, 2013 (in a very few days from now) BlackBerry will present its Q1 2013 earnings results. This is important for we will finally get a sense of the company's quarterly sales and just how good the Z10 is doing on a global basis.
Because it's one thing to speculate as to how the company might be doing and how sales are progressing, and it's another to actually know where we stand because we will finally have official data from the company. It will also be good to hear the company's comments and of course their forward looking guidance.
And CEO Thorsten Heins has some good news ahead of the report. In an interview just two days ago in the Australian Financial Review, he said:
In the context of the financial viability of the company that is where I shake my head sometimes and wonder what everyone is talking about. The company has no debt, I will report pretty good cash position by the end of March in my earnings call, so I think we did a really diligent job in, not just keeping the company afloat, but also bringing it back to health.
So we have a given that the company will report a good cash position. This is very important because it tells us that the company will not have a problem building up inventory.
I don't know what short sellers are thinking, but they better adjust their thesis as to why they have shorted this stock to begin with, because things might get out of hand and they might be "running for cover" very soon.
Another relatively recent catalyst has to do with BlackBerry's pipeline. We are getting reports that a new 10 inch BlackBerry Playbook 2 will probably be rolled out in 2013. Now we don't know if the Playbook 2 will be a success or not, but judging from the response the Z10 is getting, I am betting that many people will buy a Playbook because they might want to change ecosystems. And while the Playbook has never been a big success in the past, a new Playbook running on an updated operating system might be a whole different ballgame.
On a technical note, BlackBerry is just shy under $16. If the stock takes out the most recent high of $18.50, then the next technical target is about $24.50 and after that the next technical target is around $34 a share.
My take is that in the next few months the stock will see $24, before it rests or even corrects substantially. But then again, if the company comes out with a good report and with better than anticipated numbers, anything is possible.
For the time being I am simply reiterating my bullish sentiment on the stock, saying that it still has the possibility to double within a 12-month period -- even from today's prices -- and therefore I still have a buy rating on it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.