Research In Motion's 2009 Guidance Tracking Ahead of Consensus

A global handset survey and interviews with carriers point to another strong quarter for Research In Motion Ltd. (RIMM), Canaccord Adams said in a report. This prompted the firm to hike its price target on shares of the BlackBerry-maker to $200 from $190.

Analyst Peter Misek told clients:

In terms of customer satisfaction, market share and overall sales, RIM achieved the highest scores that we have observed in the history of our survey. As a result, we believe that RIM is tracking ahead of management’s guidance and consensus for the May quarter.

Canaccord’s earnings per share and revenue estimates for the first quarter of fiscal 2009 climb to $2.33-billion and $0.89 from $2.28-billion and $0.87, respectively. Its shipments forecast rises to 2.3 million, while net subscriber additions are expected to rise to 5.45 million.

While RIM continues to trade at a healthy premium to its peers, Mr. Misek said this is warranted “given the company’s dominance in a lucrative enterprise market and its growth prospects.”

RIM is also preparing one of the most impressive product launch roadmaps in company history, which will lead to further upside for estimates in the second half of the year, the analyst added.

Below are some highlights from Canaccord’s survey and report:

88% of respondents believe BlackBerry is gaining market share (highest score in survey history).

BlackBerry has better customer support than iPhone.

IT managers are concerned of security risk with constant pings to the tower with the iPhone.

The impact of the Brightpoint global distribution deal is being underestimated.

Comments

[bill9300]

$200/sh would give RIMM a valuation of over $110 billion, a bubble for a company with $6bn in sales.

Is this the same con as 2000? Cisco to a trillion $ valuation, it crashed 80% instead.

part of article-
Friday, March 17, 2000
Firm's market cap climbing to $1 trillion
Silicon Valley / San Jose Business Journal - by Dennis Taylor
One trillion dollars.

That's how much at least one analyst believes Cisco Systems Inc. will be worth in a few years--and you'd be hard pressed to find anyone to disagree.

The San Jose-based networking behemoth's stock closed March 14 at $131.75 a share, slightly down from its March 10 one-year high of $141.88 (The entire Nasdaq slid 4 percent on March 14.)

Thirty-seven investment banks recommend either a "buy" or a "strong buy." None recommend a "sell" or even a "hold." ...

George Kelly, an analyst with Morgan Stanley Dean Witter in New York who took Cisco public a decade ago, is one of the Cisco bulls. Cisco's stock is trading at roughly 120 times Mr. Kelly's earnings' estimate of $1.13 per share....

"A low P/E usually signals investors are uncomfortable," Mr. Kelly said.

As a reference, in 2000 Cisco's multiple of 120 compares to Microsoft Corp.'s multiple of 55 and Intel Corp.'s multiple of 42. Yet their values are below Cisco.

"One of the reasons investors value Cisco so highly right now is that, unlike Microsoft, Cisco doesn't have the uncertainty of a Justice Department settlement--it's a much cleaner situation," Mr. Kelly said. "Second, Cisco has had a tremendous track record of continuous upside surprises. And Cisco is viewed as opening several new markets, the biggest of which is optical, which is expected to be an explosive market."

Perfect returns
Paul Weinstein, an analyst with Credit Suisse First Boston, believes a $1 trillion market capitalization (stock price multiplied by shares outstanding) is within reach in a few years. He said Cisco's stock has increased 1,000 times, a perfect 100 percent annual return since it launched its IPO in 1990.

"We humbly submit that over the next two to three years, Cisco could be the first trillion dollar market cap company--and don't think they wouldn't love it," Mr. Weinstein wrote in his "strong buy" recommendation.

As of March 14, Microsoft's market cap stood about $510 billion, compared with Cisco's $465 billion, which is threefold the annual revenue of the state of California. ...



An opposing view
There are market watchers that are dubious, however, about the high valuation assigned to a large-cap company like Cisco.

Jeremy Siegel, a finance professor at the Wharton School, wrote this week in The Wall Street Journal that the high valuation assigned to large-cap technology stocks--Cisco is at the top of his list--are unsustainable.

"History has shown that whenever companies, no matter how great, get priced above 50 to 60 times earnings, buyer beware," Mr. Siegel wrote.....



..."If you had picked a price point to sell [high] at anytime in the past 10 years, you would have been wrong," he said. "They have such an impressive track record of growing ... that the financial community isn't thinking in terms of a multiple of what they're earning this year, but what they will be earning three or four years down the line." ...

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