BlackBerry's stock slumped 4.7% in premarket trade Wednesday, after Morgan Stanley analyst James Faucette downgraded the smartphone maker because he believes the market has become too optimistic about the company's ability to meet software sales targets. Faucette cut his rating to underweight, five months after he set the rating at equal weight. He also initiated a price target of $7, or 35% below Tuesday's closing price of $10.76. "When we initially set our [equal-weight] rating in June 2014, we felt the market was too pessimistic on the ability of the company to stem the cash burn and EPS losses," Faucette wrote in a note to clients. "However, we now believe the pendulum has swung too far in the other direction, and the market is now too willing to give the company the benefit of the doubt that [BlackBerry] will successfully be able to sell its new software and messaging offering." The stock has run up 45% year to date through Tuesday, compared with a 44% rise in Apple's stock and an 11% rise in the S&P 500.
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