RIM: Canaccord Adams Analyst Finds Concerns Overdone

Shares of Research In Motion Ltd. (RIMM) have fallen roughly 22% in the past two weeks. Weakness in the financial services sector and fears that this will hurt BlackBerry sales are taking some of the blame.

But Canaccord Adams analyst Peter Misek thinks the concerns are overdone and the lower share price represents a buying opportunity.

He says RIM’s exposure to the financial services sector is only through 10% to 15% of its subscriber base, much lower than a year or two ago.

Mr. Misek also looked back to the last slowdown in financial services between 2000 and July 2002 when Wall Street firms reduced jobs by roughly 7%, or just over 25,000 people. If the same thing were to occur today, it would be equivalent to just one day of net subscriber additions for RIM, he told clients in a note.

RIM saw consumer segment subscriber growth of nearly 50% last quarter, a trend Mr. Misek thinks will continue this quarter and one that signals its diversification.

The analyst also expects RIM’s net subscriber additions will be strong this quarter due to demand in Europe and Latin America, as well as with Verizon (VZ) and AT&T (T) in the U.S. He forecasts shipments of 4.1 million BlackBerrys and 1.8 million net subscriber additions for the quarter, versus the consensus at 3.7 million and 1.7 million, respectively.

Mr. Misek maintained his “buy” recommendation and US$160 price target on RIM shares.

Comments

[stock100us]

It seems Peter Misek has forgotten to consider Valuation. With his price targer of $160 RIM would have a valuation of $90 billion, a little high for a company with $4 bn in sales. Even if sales doubled it would be high by any standards.