UBS Analyst: Bigger Things to Come from Research In Motion

Not content to have a stranglehold on the business smartphone market, Research in Motion Ltd. (RIMM) is laying out a strong foundation for becoming an even bigger player in the handset industry, targeting the larger consumer market, says UBS analyst Jeffrey Fan.

In a note to clients, Mr. Fan says “it is clear” that RIM is “entering a higher mass market appeal level” with more versions of its BlackBerry in the near term, along with greater manufacturing and infrastructure scale coming on stream in the second half of the year. Longer term, “with RIM’s expectation for every phone to be a smartphone,” he says, RIM is gearing for a multiple-SKU (stock-keeping unit) strategy and much larger unit volumes.

He adds that although there may be some investor concern regarding the quarter starting in August, it’s likely there will be a July launch of RIM’s new 3G BlackBerry smartphone in Europe, and an August launch target for the 3G with AT&T (T) in the U.S. While Apple’s (AAPL) 3G iPhone launch in late June may impact investor sentiment, he says, “we believe the market is large enough for multiple vendors.”

Mr. Fan is maintaining his buy rating and C$165 target price on RIM, based a multiple of 35x his pro forma EPS estimate of C$4.70 for fiscal 2010.