BBRY Options: What are Analysts Saying Ahead of Q1 Earnings

BlackBerry Ltd (NASDAQ:BBRY) is in my scopes again as the company prepares to release its fiscal first quarter (Q1 2016) results next week on Tuesday. We have covered trading BBRY options extensively here and I can’t just seem to get rid of my fixation on the stock. You can read my previous coverage on BBRY here, here, and here.

BlackBerry with its market capitalization of $4.89B is a provider of wireless solution, comprised of smartphones, service and software. The Company is engaged in the development of integrated hardware, software and services that support multiple wireless network standards. The Company’s portfolio includes the BlackBerry wireless solution, the BlackBerry Wireless Handheld product line, software development tools and other software and hardware.

The BlackBerry Bears

Leading the bearish side on BlackBerry are the analysts at Morgan Stanley. The research firm has an “underweight” rating on BlackBerry ahead of the company’s upcoming Q1 results. One of the reasons behind their pessimism on the stock is that the market is becoming more saturated and competitive.

The company has not been able to obtain a turnaround on device sales and its BB10 operating system is still a distant third behind Google’s Android OS and Apple’s iOS. However, the company has a bright spot in its Enterprise business. The Enterprise business has been the main reason BlackBerry hasn’t gone into extinction.

However, Morgan Stanley analysts think that there is less room for growth for BlackBerry in the enterprise market. According to Morgan Stanley’s James Faucette BlackBerry’s Mobile Device Management (MDM) is already sold out. Data suggests that it is being used in 50 percent of eligible devices and penetration could be as much as 75 percent on a dollar basis.

The BlackBerry Bulls

The bullish side of the market believes that with BlackBerry, it is not over until it is over. The optimism of the bullish side is hinged on the fact that BlackBerry has gained 18% within the one year. The company has consistently beaten estimates in the last four quarters and it has outperformed the consensus in 15 out of the last 20 quarters.

Fast Money trader, Brian Kelly told CNBC’sBehind the Trade” that BlackBerry traders should be ready to see a breakout in the stock after its earnings release next week. His optimism is hinged on the fact that each passing day makes BlackBerry more open to the possibility of a takeover. Last Week, BlackBerry revealed that it would be making an Android phone in a sharp deviation from BlackBerry devices made for BB10 OS.

In addition, Kelly expects BlackBerry’s growing presence in the autonomous vehicle space to help the company reposition itself. According to Kelly, “BlackBerry QNX is the middleware that allows both Google and Apple’s smartcar apps to run… It’s essential to the new push to connect cars to the Internet yet BlackBerry does not get enough credit for it, but I think that could change.”

How to Trade BBRY Options

I think the bullish side for BlackBerry has a more compelling argument than the bearish side for BlackBerry. I am camping with the bulls on BlackBerry. I recommend buying BBRY call options. You should consider buying the BBRY Dec 2015 11.000 call (BBRY151218C00011000) at an asking price pf $0.63.


— Daily Option Alerts

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