Everyone loves a good turnaround story. This is especially true for investors when it comes to turnaround stocks.

These often-scorned investments can prove a host of doubters wrong and deliver stunning upside as remaining bears turn back into bulls. Yet what happens to a turnaround stock that already has legions of bullish supporters? More importantly, what if a turnaround fails to take root?

Those are the concerns surrounding BlackBerry (Nasdaq: BBRY), the maker of smartphones, tablet computers and other communications gear.

In January, with BlackBerry trading at nearly $18, I expressed several concerns about the company.

A few weeks later, after investors had digested a quarterly report, shares quickly moved below $14. But BlackBerry is again rising from the ashes. Instead of falling into single digits as I had feared, shares are back up to the $16 mark.

But it’s far too soon to declare mission accomplished for BlackBerry. Serious hurdles remain, and recent sales trends are worrying.

Z10 And Q10: A Mixed Bag
To regain market share, BlackBerry unveiled the Z10 and Q10 smartphones in late January. The Z10 has a similar look and feel to Apple’s (Nasdaq: AAPL) iPhone and the numerous Android smartphones made by Samsung (OTC: SNNLF) and other competitors.#-ad_banner-#

On the other hand, the G10 comes with a full physical QWERTY keyboard — a nod to BlackBerry devotees who have found the layout easier to use. The physical keyboard is also a departure from the growing trend of virtual keyboards on most smartphones.

A key concern for BlackBerry had been shelf space, but a variety of wireless carriers, in a bid to usurp the Apple/Android hegemony, now carry BlackBerry’s products. However, these carriers have provided little marketing support — either in terms of advertising or the pricing subsidies like those seen with AT&T (NYSE: T), Verizon (NYSE: VZ) and T-Mobile (NYSE: TMUS) for the iPhone. For BlackBerry, that lack of carrier support may now be coming home to roost.

In a May 6 report, Michael Walkley, who covers BlackBerry for Canadian investment firm Canaccord Genuity, surveyed industry contacts and noted weakening sales of the Z10 over the past month. Demand for the G10 appears more solid, he said, adding that supply of the phone has been limited and it’s too soon to gauge long-term demand. Walkley slashed his phone sales estimates for the quarter by 500,000 units, to 2.8 million, which appears to be at the low end of Wall Street forecasts.

The already softening sales trends for the all-important G10 led Walkley to conclude that BlackBerry won’t be able to move back into profitability. He forecasts the company will lose 44 cents a share in fiscal 2014 and 75 cents a share in fiscal 2015.

Rising losses, in his view, will be the result of falling sales, as BlackBerry’s legacy revenue streams shrink faster than the company’s smartphone sales can grow. Walkley sees shares falling to just $9, which is roughly the value of the company’s existing base of assets. (It’s worth noting that others expect BlackBerry will indeed end up on the auction block, though most buyout prices are higher than Walkley’s takeout price.)

Other Views
Walkley isn’t alone in his concerns. About six weeks ago, upon the release of BlackBerry’s fiscal fourth-quarter results, Citigroup’s analysts noted that the Z10 was off to a slow start in markets outside the United States. If global sales didn’t pick up soon, they said, “we believe BlackBerry could see additional subscriber losses and be forced to do a price cut to its products, both of which would pressure margins and earnings.” Citigroup sees shares falling from a recent $16 to $10.

Other analysts aren’t quite so bearish. UBS sees more limited downside to around $13, though they “are not convinced yet BB10 will be a viable platform and remain on the sidelines with a cautious stance.” BlackBerry is likely to review first-quarter sales results in mid-June, and UBS thinks investors will be keeping a close eye on BlackBerry sell-through rates (i.e. sold at phone stores and not just to the wireless service providers), selling prices, and the average revenue per user generated each month by existing and new customers.

Merrill Lynch, with a price target of just $8, thinks the average revenue per user will be quite weak. They “expect material declines in service revenues, with pressure on BB7 pricing, elimination of consumer service revenues on BB10 and decline in enterprise revenues for email-only clients.”

BB7 is the company’s legacy operating system. Merrill’s analysts see little promise in BB10, the company’s newest platform. The operating system itself is good enough in their view, but the more than 100,000 apps tailored to run on them is dwarfed by the roughly 800,000 apps offered by the Apple and Android ecosystems.

Complicating things further for BlackBerry, wireless carriers may soon have more options besides BlackBerry and Microsoft (Nasdaq: MSFT) as they seek to broaden the field beyond the Apple and Android ecosystems. A recent Wall Street Journal article suggests that Samsung, Intel (Nasdaq: INTC), LG Electronics and others are readying their own mobile operating systems, which would make for a very crowded field — and make BlackBerry’s task of increasing market share even more difficult.

Looking for a bullish take? Well, Goldman Sachs has a $17 price target, noting that shares are only slightly overvalued on the key financial trends — but perhaps vastly undervalued in the context of a company sale. Goldman’s analysts think BlackBerry would fetch a hefty $28 a share in such a scenario. They assign a 15% chance of such an event taking place, so it has only a modest effect on their overall target price.

Risks to Consider: As an upside risk, BlackBerry may look to partner more aggressively with specific wireless service providers, which could help to boost market share.

Action to Take –> This remains a popular stock with a hard-core set of retail investors — but BlackBerry might not have a lot of time to retain their loyalty. If sales trends in the current quarter are as weak as some analysts suggest, then the remaining hopeful bulls in this stock may lose patience, and shares may quickly move toward the $10 mark.

P.S. — StreetAuthority’s Amy Calistri has one objective for readers of Stock of the Month… to provide one quality stock pick each month, with in-depth analysis in plain English that investors can understand. In fact, she just released a special presentation, “How to Beat the Stock Market… In Just 12 Minutes per Month,” which tells you more about her strategy. Go here to learn more.