Expectations for RIMM: Analysts Continue to Differ

It should be to no surprise for investors that Research In Motion Ltd. (RIMM) finds itself in a precarious moment in its corporate history. The BlackBerry-maker has released four new devices in the middle of a global economic downturn, one that has led Barclays Capital Markets analyst Jeff Kvaal to trim his smartphone growth estimate from 40% to 25% over the next year.

Mr. Kvaal lowered his earnings estimates from $4.50 per share to $3.70 for fiscal 2010, saying that, “Lowering expectations may be a first step towards a share price recovery.” However, Scotia Capital’s Gus Papageorgiou feels that there could not be better time to buy RIM shares.

Mr. Papageorgiou said:

Valuation has rarely been this attractive, the product portfolio has never been as compelling or diverse and finally, and most importantly, carrier support has never been as strong.

The only fly in the ointment is an economic environment that is challenging to say the very least. But on balance we believe this company’s fundamental competitive strengths and industry dynamics have been discounted to a point where they are seen as almost worthless and the economic risks heightened to the point where they are seen as the sole relevant variable in a very complex equation.

He holds a “sector outperform” rating on the stock with a C$160 price target.

Meanwhile, RIM shares got an early boost following a report from Goldman Sachs Group that it added the stock to its “conviction buy” list. However, it had retreated by midday.

Comments

[Hayweed:]

It appears that the initial review on the Storm coming out Friday on Verizon's network are giving the phone a nice try but not ready for prime time and definitely no iphone. I assume a lot of money was spent on this project and if it flops Rimm will have damaged their name tremendously.

2008 Nov 20 12:13 PM

[kris23:]

I'm really excited for the debut of the Storm despite somewhat mediocre reviews. Either way, I think this phone is much needed for RIMM right now to throw them back into the smartphone buzz. Sentiment has recently become more bullish for RIMM and I think it has something to do with the release anticipation. They are forecasted to close up today (www.predictwallstreet....). I predict they will close up too, I only hope they can ride this optimism out until the end of year.

2008 Nov 20 01:16 PM