Goldman Analyst Incredibly Bullish on Research In Motion

Goldman Sachs has initiated coverage of Canadian tech giant Research In Motion Ltd. (RIMM) with an incredibly bullish outlook for the BlackBerry maker.

In a research note,Goldman Sachs analyst Simona Jankowski wrote:

Our view is that RIM will continue to meet or beat Street estimates over the next 1-2 years and benefit from multiple expansion, as the market adopts the view that RIM will be one of the long-term winners in the fast-growing smartphone market, driven by its products’ sustainable differentiation, stickiness, and expanding channel.

RIM has only scratched the surface when it comes to its growing its share of the smartphone market. Although it currently has about 14 million subscribers and about 1% of the total global handset shipments in 2007, it pales in comparison to the three billion mobile users around the world. RIM should grow its market share in the global smartphone market from 14% in 2008 to 19% by 2012. However, rising competition from a number of key rivals could add subscriber pressure, said Ms. Jankowski.

She said:

In the near term, the primary competition is likely to come from the upcoming 3G iPhone launch by Apple in June, as well as Nokia’s E71 launch around the same time. In addition, HTC recently launched its Touch Diamond smartphone which utilizes a touch screen similar to the iPhone and has a compelling form factor and feature set based on a QUALCOMM chipset.

Longer-term, we believe Microsoft will increasingly challenge RIM’s stronghold in the enterprise segment, as our checks suggest that it has significantly increased its engagement with enterprise customers and has made improvements to its Windows Mobile feature set that have started to narrow the gap versus RIM.

Ms. Jankowski cites RIM’s network efficiency and its “vertically integrated end-to-end wireless solution” as the main driver that separates the company from the rest of the smartphone pack.

The Goldman Sachs analyst has a “buy” rating on the stock with a $163 price target.

Comments

[bill9300:]

Bubble Valuation ignored, priced to more than perfection-

They were also very bullish on Enron, said Enron “Best of the Best”.

GS has a large holdings in RIMM, at 3/31/08 they owned 8ml shares after dumping 2.7 ml share in the Q.

They seemed to have ignored Valuation and put a $163/ target price on, that would give RIM a Valuation of over $90 billion, a little high for a company with $6bn in sales, slowing growth and a P/E of 60 now.

Will RIM ever be able to justify a $90bn valuation, who know what the future will bring with all of the competition out there?

GOLDMAN SACHS, October 9, 2001 -

Recommended List Large-Cap Growth
Price:US$33.45 Target price: US$48 S&P 500: 1051
United States Enron Corp. (ENE)

Gas & Power Convergence

Still the best of the best. With perceptions far below reality, we see major catalysts in third-quarter results and increased
disclosure in coming months. We strongly reiterate our Recommended List rating and our conviction in high and sustained growth prospects, even though we have cut 2002 EPS to $2.15 and our price target to $48. We expect Enron shares to recover dramatically in the coming months. We view the current period as an extremely rare opportunity to purchase the shares of a company that remains extremely well positioned to grow at a substantial rate and earn strong returns in the still-very-young and evolving energy convergence space.

We strongly reiterate our Recommended List rating on Enron stock. We spoke recently with top management including the CEO, CFO, chief accounting officer, and the head of wholesale services.

We challenged top management on the wide range of investor concerns that have weighed heavily on the shares and believe that the majority of market speculation is groundless, and that which has some truth to it, to be exaggerated.

Misconceptions abound and perceptions are far below reality, in our view We believe that investors have virtually given up on Enron (down 60% year to date) and its prospects based on the long list of extremely negative stories about the company and its financial condition.

The company's limited transparency on its sources of earnings, its cash flow, and financials in general has hurt investor perceptions as management has declined to be more specific in refuting outrageous claims that have assumed a life of their own.

We believe Enron's fundamentals are still strong despite the weak economy. We view Enron as one of the best companies in the economy, let alone among the companies in our energy convergence space. We are confident in the company's ability to grow earnings more than 20% annually for the next five years, despite its already large base.
www.actwin.com/kalostr...

2008 Jun 04 08:28 AM

[will:]

GS is full of crap. Their so bullish thats why the stock sold off yesterday 5 points. GS is FOS and speak with fork tongue.

2008 Jun 04 08:49 AM

[G.R.:]

yeah yeah.. we know the deal. RIMM manipulated up to $150 or $160 then crashes 75% when everyone 'realizes' oops 60 p/e's arent normal

2008 Jun 04 01:46 PM

[Summa:]

What a fraud!! FP left out the part about RIMM warning for the coming quarter!

seekingalpha.com/artic...

2008 Jun 04 07:48 PM

[.crazylegs..:]

you guys miss the larger point - the market for their product is exploding, so looking at historical PEs will always result in what appears to be a ridiculous valuation. They'll put up about $4 in earnings this year so low 30s forward multiple is fair given the growth. I love the rearview mirror approach in fast growing companies to justify a bear position. RIM's CEO recently said he sees only about 10% penetration in the corporate mkt. Imagine what that means for their growth just in the corporate mkt.

Comparing this to Enron is stunningly stupid, irresponsible, and laughable. So you are saying RIM is a fraud? Because it's one thing to trade weather futures and new fangled derivatives that no one understands and do side deals with execs to put up a facade of earnings. It's an entirely different thing to walk around the streets and see pearls, curves, 8800s, 8700s, even 7200s that folks are using and see the sell through on devices, do channel checks, etc. I would say RIM has a slightly simpler business than Enron.

2008 Jun 06 12:43 PM