Shares of Blackberry popped 28.4% on Jan. 25 taking their gain over the past five days to a whopping 83%.
The steep rally has prompted Canada’s Investment Industry Regulatory Organization to ask Blackberry (BB) to comment on the recent trading activity.
“The Company is not aware of any material, undisclosed corporate developments and has no material change in its business or affairs that has not been publicly disclosed that would account for the recent increase in the market price or trading volume of its common shares,” Blackberry stated on Jan. 25. (See BB stock analysis on TipRanks)
Separately, the security software services company on Jan. 25 announced that it is broadening its strategic partnership with Baidu (BIDU). Baidu’s HD (high-definition) maps will now be deployed on Blackberry’s QNX Neutrino Real-time Operating System (RTOS). This system will run on the upcoming GAC New Energy Aion EV (electric vehicles) from GAC Group (Guangzhou Automobile Group).
In reaction to BB’s sharp share gain, RBC Capital analyst Paul Treiber downgraded the stock from Hold to Sell and set a price target of $7.50 (58% downside potential).
Treiber commented, “Our downgrade reflects: 1) the rally in BlackBerry’s shares pushes valuation to multi-year highs and above peers; 2) the fundamental outlook for BlackBerry’s UEM/Cylance businesses has not materially changed; and 3) the probability of an unannounced IP licensing gain appears low.”
Overall, analysts are cautiously bearish about the stock and the consensus is a Moderate Sell with 2 analysts recommending a Hold and Treiber’s Sell. The average price target of $8 implies 55.6% downside potential to current levels.
The stock has also seen some insider trading activity in the past three months with corporate insiders selling shares worth $6.3 million.