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BlackBerry's Stock is Approaching a Sweet Spot

Picture of BlackBerry's CEO Thorsten Holding BB10 Phones

There was a point when any reference to BlackBerry (BBRY) required the obligatory description of "beleaguered tech giant." With shares now soaring well over 30% on the year and the company's flagship phones selling so well, such a dubious distinction no longer applies.

The company is exceeding all expectations. The question now is, how high can the stock fly. Remarkably, the Street is still overall neutral to bearish on the company as several analysts still have price target on the stock that is well below the $16 per share the company is trading at today.

Mark McKechnie of Evercore Partners recently reiterated is "underweight" rating on the stock and has an $8 price target, 50% below current valuation. In a research note, McKechnie said he expects “volatility around the event as the company will likely provide a positive update on early adoption of its new Z10 and Q10 products.”

I don't disagree with McKechnie's reference to volatility. But BlackBerry just completed a quarter where it outsold Street unit expectations by 1 million. Granted, the volume is not moving to the extent of Apple (AAPL) or Samsung, but the company's certainly not grossly underperforming as is presumed by the $8 target.

However, BlackBerry's recent performance has earned the attention of Mark Sue, analyst at RBC Capital Markets, who completely disagrees with McKechnie's views. Sue has a "sector perform" rating on the stock with an $18 price target, or 13% higher than current levels.

BlackBerry has a 52-week high of $18.32, which the company hit on January 24, ahead of its BB10 launch. This is the "sweet spot" investors are looking to reach. If BlackBerry can break that level, $20 should will quickly be the next level of resistance to fall. I do wonder, though, what will investors do at that point.

Not only would $18 represent 51% gains on the year, it would also represent gains of almost 200% since the stock bottomed at $6.22 last summer. There's certainly a case to hold the stock and see how high it can go. When BlackBerry reported results for its fiscal fourth-quarter, the company's CEO, Thorsten Heins, said:

"We have implemented numerous changes at BlackBerry over the past year and those changes have resulted in the Company returning to profitability in the fourth quarter. With the launch of BlackBerry 10, we have introduced the newest and what we believe to be the most innovative mobile computing platform in the market today. Customers love the device and the user experience, and our teams and partners are now focused on getting those devices into the hands of BlackBerry consumer and enterprise customers."

It certainly looks that way. With such momentum on both the company and the stock, it's anyone's guess where the shares are heading. The good news is that BlackBerry's worst days are over.

Disclosure: At the time of publication, Richard held shares of Apple and no positions in the other companies mentioned.

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