Higher BlackBerry Margins, Share Could Provide 20% Upside to RIM

| About: BlackBerry Ltd. (BBRY)

Over the last week, Trefis members have predicted improving margins and market share for BlackBerry phones, which account for around 50% of Research in Motion’s (NASDAQ:RIMM) stock. RIM competes with other mobile makers like Motorola (NYSE:MOT), Nokia (NYSE:NOK) and Apple (NASDAQ:AAPL). We currently have a Trefis price estimate of $72 for Research in Motion’s stock, about 42% above the current market price of around around $51.

Trefis members have created forecasts for Research in Motion’s two key drivers: (1) BlackBerry Mobile Phone Market Share and (2) BlackBerry Gross Profit Margin. The member forecasts suggest that both drivers will trend above the estimates made by the in-house team of analysts at Trefis. These projections indicate a combined upside of more than 20% for RIM’s stock.

Research in Motion’s stock is quite sensitive to (1) BlackBerry Mobile Phone Market Share and (2) BlackBerry Gross Profit Margin. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

1. BlackBerry Mobile Phone Market Share

The average of Trefis member forecasts for BlackBerry Mobile Phone Market Share project an increase from 4% in 2010 to around 9% by 2016, compared to the baseline Trefis estimate of an increase from around 3% in 2010 to 8% by the end of the Trefis forecast period. The member estimates imply an upside of 12% to the Trefis price estimate for Research in Motion’s stock. In the past, BlackBerry Mobile Phone Market Share has increased from 0.3% in 2004 to close to 3% in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Research in Motion’s stock to BlackBerry Mobile Phone Market Share.

2. BlackBerry Gross Profit Margin

The average of Trefis member forecasts for BlackBerry Gross Profit Margin project a decrease from around 36% in 2010 to around 34% by 2016, compared to the baseline Trefis estimate of a decrease from around 35% in 2010 to 29% by the end of the Trefis forecast period. The member estimates imply an upside of 10% to the Trefis price estimate for Research in Motion’s stock. In the past, BlackBerry Gross Profit Margin has decreased from 40% in 2003 to around 36% in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Research in Motion’s stock to BlackBerry Gross Profit Margin.

Disclosure: No positions