BlackBerry Limited (BBRY) shares plummeted nearly 10% over the past couple of sessions after the company reported worse-than-expected first quarter financial results. The original smartphone maker reported revenue that fell 39% to $244 million, missing consensus estimates by $20 million, and earnings per share of two cents, beating estimates by four cents. Despite reiterating its FY2018 guidance and instituting a share buyback, BlackBerry’s stock price moved lower due to soft revenue, customer loss concerns and worries that the growth in its software business may begin to slow.
Analysts echoed many of these sentiments following the company’s financial results. Morgan Stanley maintains an Equal Weight rating with a $10 per share price target, saying that the software revenue disclosures made it difficult to assess underlying growth drivers. Meanwhile, RBC maintains a Market Perform rating with a price target of $9.50 per share, adding that the software revenue miss was tied to professional services. (For more, see: BlackBerry’s Q1 Earnings Break Even, Revenues Miss.)
From a technical standpoint, the stock broke down below its 50-day moving average at $10.13 but appears ready to retest those levels. Technical indicators appear somewhat mixed but maintain a bearish bias. The relative strength index (RSI) appears rather neutral at 43.92, but the moving average convergence divergence (MACD) remains in a bearish downtrend. The upshot is that the 50-day moving average crossed above the 200-day moving average in April.
Traders should watch for some consolidation near the 50-day moving average, trendline resistance and pivot point at $10.44 before a possible breakout higher. On the downside, watch for a breakdown below S1 support at $9.32 to close the gap to S2 support and the 200-day moving average at around $8.05. A bearish bias may still be advisable at these levels, but the stock remains difficult to tread from a technical standpoint. (See also: Is BlackBerry a Buy After Its Pivot?)
Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.