Research In Motion: Price Target Raised Substantially by GMP Research

Now that Research In Motion’s (RIMM) market cap is well above the Royal Bank’s (RY), perhaps Canada’s technology industry will start to attract more investment capital. Here is Wednesday morning’s RIM note from our friends at GMP Securities.

Raising forecasts on new product growth

• Raising forecasts: We are raising our forecasts and target based on higher growth from new product launches and continued positive feedback from wireless network operators.

• New BlackBerry Bold: The high-end 3G model for GSM network operators should boost sales when shipments begin in summer.

• More new products to follow: We expect more product launches this year including likely clamshell and touchscreen models. We expect RIM to continue to gain share vs. MOT and NOK. Discussions with several wireless network operators which continue to suggest strong growth ahead for RIM. In the past week, we spoke with contacts predominantly at U.S. carriers but also two overseas carriers, as well as a few software developers.

Generally the industry contacts offered very strong positive views on prospects for RIM to continue to grow in the enterprise market and some mainly positive views (but less conviction and less information) on RIM’s prospects in the consumer market. Some dissension also is worth observing: two carrier contacts expressed positive views on Apple’s iPhone and one expressed low confidence in RIM in the consumer segment (due to Apple’s strength.)

That said, generally the information was no less bullish on RIM in the enterprise than ever (”Microsoft needs to catch up” is a theme we’ve heard for many years that continues to be commonly held.) Moreover, a handful of the contacts were strongly bullish on RIM in the consumer market either based on products they had seen but couldn’t discuss or based on their history of successful dealings with RIM over many years. Anecdotally, two U.S. network operators said they had seen a surge in Blackberry sales due to the low-cost Pearl and Curve models appealing to consumers.

• Target and forecast: Our new target of US$190 [from US$150] is based on premium 35x multiple of F2010 EPS of US$5.45. We maintain our BUY rating.

Disclosure: The author owns RIMM.

Comments

[mikemichaelson:]

nothing like upgrading a stock at it's all time high after a huge run up that sells a consumer discretionary product in an economy that is slowing substantially because the consumer is financially strapped. i wonder how many retailer investors bought on this recommendation.

2008 May 22 10:01 AM

[mikemichaelson:]

nothing like upgrading a stock that has had a huge runup, is trading at an extremely high valuation (see 10 times sales), and that sells a consumer discretionary product in an economy that is slowing significantly due to a financially strapped consumer. i wonder how many retail investors bought on this recommendation.

2008 May 22 10:04 AM

[will:]

It's GMP Research not BMP and their price is a joke.

2008 May 22 10:19 AM

[bill9300:]

when they issue their phony price targets, do they think of valuation? When you buy something do you think of how much you are paying? Or if you are overpaying? This stock is an overvalued bubble.



The latest BS "Target Price" was $190/sh for a valuation of $107bn.



A company with $6bn in sales and a profit of $1.3bn, pe of over 60 and now valued at over 12 times annual sales. With growth slowing-100% growth is over.



At the current price of $130/sh, RIM is valued at $240 for every man, woman and child in the USA,

RIMM market cap is $73 billion= $ 73,000 Million.



At a phony Target Price of $190/sh, RIM would be valued at $107 bn, Divided by 304ml it would be valued at $351 for every man, women and child in the USA.



Can longs UNDERSTAND THAT VALUATION BUBBLE????



Population at-

US population is 304,128,000

www.census.gov/main/ww...

2008 May 22 08:10 PM

[Warm_Paw:]

Blackberry products are in huge demand and being a device used by the business world, it's sales continue to climb.
When there is nothing left to invest in, Rimm is one of the few positive companies in this questionable time period.
$190 is not out of reach and wireless is in it's infancy.

2008 May 26 08:43 AM