Investors aren’t the only ones running from Research In Motion Ltd. (RIMM) [down 19% in afternoon trading] on Friday. Analysts, too, are expressing grave reservations about the BlackBerry maker as it slashes its target prices on the stock, a day after RIM reported shockingly bad quarterly results. Here’s a quick roundup of what some analysts are thinking.
Kris Thompson, National Bank: “The short Q2 results synopsis is RIM missed on most everything: handset and PlayBook shipments, revenue, gross margin and EPS. We are more concerned than ever about the company’s long-term sustainability. In our view, the company’s restructuring failed, the PlayBook failure looks to be a major headache, service revenue profitability looks to be breaking down and an increased credit facility flags cash flow concerns.” New target: $20 (U.S.), down from $35.
Phillip Huang, UBS: “We continue to believe RIMM needs fundamental change in vision/strategy, and its transition to QNX must be near flawless to garner support from developers. While we prefer to remain on the sidelines and monitor sell through of BB7 devices for potential near term support for the stock, we continue to foresee eroding market share in longer term.” Target: $32 (unchanged).
Mike Abramsky, RBC Dominion Securities: “Credibility sinks further as it’s apparent to us that visibility remains very low and investor risks remain elevated.”
T. Michael Walkley, Canaccord Genuity: “While RIM management remains bullish on its prospects for the Playbook and new BlackBerry 7 smartphones, we maintain our more cautious view as we believe RIM is underestimating the increasingly competitive smartphone environment. We believe RIM’s lack of a competitive ecosystem is contributing to gross margin pressure for its hardware products, and we anticipate further margin pressure in F2013.” Target: $28, down from $35.