The flurry of “earnings season” is behind us, but some off-season quarterly reports come out every week. One of the companies scheduled to report its 2013 fourth quarter earnings this week is Canadian smartphone maker BlackBerry (BBRY).
Here’s what I’m looking at headed into the call … and how I expect to trade the stock afterward.
CEO John Chen has made some big changes since his appointment last fall, the most recent of which was finally confirmed Friday — the company is selling more than 3 million square feet of its Canadian real estate holdings. As part of this move, the company will lease parts of the space back, which will further help to free up cash flow.
BlackBerry reports this Friday before the bell. It is expected to report a per-share net loss of $0.57 on top-line revenue of $1.11 billion for its fourth quarter, well below year-ago marks of $0.22 per share and $2.68 billion.
BBRY stock investors have had a rough time since the stock peaked in 2008. After flirting with the $150 mark in 2008 (after all the stock splits, the most recent of which was a 3:1 split in August 2007), the stock plunged to $5.50 in September.
But if you’re looking to trade BBRY stock after the upcoming earnings results, rather than looking all the way back to 2008, it is more important to understand the more recent lower low from last December. Through the lens of technical analysis, both a marginal higher low or lower low versus a previous low can be a bullish sign. In the case of BBRY, last December’s marginal undercut of its September 2012 lows led to a quick snapback rally during which the stock jumped around 90% in a little more than one month. Since mid-January, however, the stock has settled into a sideways consolidation range — and it looks like this range could be resolved in one direction or another once after Friday’s earnings announcement and outlook are out.
On the daily chart, note that BBRY stock’s January highs were retested in mid-February, and at the time coincided with the diagonal resistance line dating back to January 2013. In many respects the price action after Friday’s results could make or break the stock’s near- to medium-term outlook. Note that recently the yellow 50-day moving average crossed above the red 200-day moving average.
Bull Scenario for BBRY Stock
If BBRY stock rallies and closes above $10.85 — the January and February highs — then the stock likely has upside toward $13 and possibly $15 in coming months.
Bear Scenario for BBRY Stock
If BBRY stock again drops below lateral support around the $9 mark, then the rally off the 2013 December lows may again be challenged and the stock would have to regroup before the long side becomes attractive again.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.