Research In Motion: Stock's Weakness Presents Buying Opportunity

A recent 15% pullback in shares of Research in Motion Ltd. (RIMM) represents “the most compelling” buying opportunity for the stock in the past 12 months “ahead of a major product rollout cycle,” says Canaccord analyst Peter Misek.

In a research note, he said:

Our channel checks indicate thatn ew product launches are on tract for stellar shipment volumes at both AT&T (T) and Verizon (VZ).

At AT&T, growth will be fueled by the launch of the Bold in August and the Javelin in October, while Verizon is scheduled to launch RIM’s Thunder model for late August. It is expected to be heavily marketed against Apple’s (AAPL) iPhone.

Mr. Misek said:

Current leaks suggest that the Thunder touchscreen keyboard utilizes a  tactile screen combined with Haptic technology that will provide RIM with an edge when competing with the iPhone. Moreover, we are hearing that T-Mobile is expected to receive the Kickstart in the August time frame. Overall, these product launches are setting RIM up to have a "major November quarter.

The analyst suggests investors buy on RIM’s current weakness to increase their holdings. He has a buy rating and a C$225 target price on the stock, which at just over C$120 currently trades at about 16X his fiscal 2010 earnings-per-share estimates.

Comments

[Alton P.]

This is possibly the most irresponsible piece of "analysis" I've come across.

This Peter Miserek fellow knows what RIMM will earn in 2010 ? I have no idea what I'll be earning in 2010, in spite of being employed now, in a senior position, in a job I've had for 5 years now, with a company I've worked for 14.

But I can't tell you what, if anything, I'll be making in 2010. I can tell you what I save, because it's been the same more or less for a decade, and I used to be able to tell you what I have saved, in my retirement fund, in my kid's college funds, and so on.

Not anymore, they've seen to that, these professionals. In between Oct 2006, when Greenspan first said "it appears the housing slump may well be already over" through this April and May 2008, I've lost maybe half my money.

Did I do something stupid ? Yes, I did. I followed analysts, and the advice of people who are "professionals&qu... and use their "experience" and "skill" to advise the rest of us, who have different skillsets and thus do different jobs.

But let me tell you that if I'd do my job as well as these professionals, and the rest of hard working, real people'd do their job as well as these puppet heads, we'd all be cold hungry and naked.

So, I can tell you what Peter The Good Soldier Švejk SHOULD be making, tomorrow through 2010. It's the same everyone should be making, a fraction of the value of their work. In his case, that comes to the same ammount no matter what fraction you consider.

I don't intend to let him help me out of the rest of my savings, saving money is a lot harder than saying stupid things in little "research notes" for a beer and two hot-dogs.

[UtterlyDisgusted]

$225 /RIMM share would create a market cap of $125b for a company with a single product line and competition hot on its heels. Really !!

[Tom B]

"$225 /RIMM share would create a market cap of $125b for a company with a single product line and competition hot on its heels. Really !!"

Moreover, why bet money on the guys playing tech-catch up vs the best the computer/CE company on the planet-- a company, which I add--ALSO has a depressed stock price right now. Woo-hoo--Rimm is playing around with touch screens-- I'm SO excited. Well, Apple just made 3rd party apps simple with iPhone 2, and, you know what? Dollars to donuts, there'll be a really improved iPhone 3 by 2010. AAPl also has a ridiculously low P/E.

[.crazylegs..]

Please remember that RIM's 2010 year ends Feb 2010 or only about 18 months out, so he's only guessing about next year's earnings.

Alton P., you seem to be disgruntled by the broader markets, no need to take it out on this analyst - he's actually been pretty good on RIMM.

RIM represents one of the best growth opportunities in this market, along with Apple. Everyone is focused on the head to head at the high end of the market and they fail to realize that RIM is quietly positioning the company to serve ALL markets. Add the massive distribution RIM has (375 networks) and they have a huge opportunity to compete against iPhone for high end users and compete against samsung, lg, motorola at the lower end. Don't be so sure that having the absolute best mobile platform will mean others can't do well. After all, how many years has Apple made much better computer products with a kick ass OS but only realized a very low mkt share. Fortunately this is beginning to change. Being long both RIMM and AAPL will serve you well in the next few years as mobile users move en mass from dumb phone/text only devices to full fledged smartphone/mini-comput...

[Alton P.]

"RIM represents one of the best growth opportunities in this market, along with Apple." you say ?

There's no "along" to be had. The correct sentence reads "Apple represents the sort of opportunity RIMM attempts to fake".

Consider the fundamentals :

AAPL :

Trailing P/E (ttm, intraday): 36.43

Price/Sales (ttm): 5.34
Price/Book (mrq): 8.51

Revenue (ttm): 28.75B
Total Cash (mrq): 19.45B

RIMM :

Trailing P/E (ttm, intraday): 43.27

Price/Sales (ttm): 9.25
Price/Book (mrq): 14.95

Revenue (ttm): 7.17B
Total Cash (mrq): 1.38B

Four times the revenue, 20 times the cash on hand, half the price, multi-industry multi-product line leader Apple, with 50 years of history as chief revolutioneer under it's belt does NOT anything whatsoever along single line, single product, delays-and-issues, technologically stale, RIMM. You're not comparing apples and oranges, you're comparing flies and fly swatters.

On top of which, RIMM just put in a very rare triple top, setting the long term high price under 122, and is just cents away from a death cross.

I'm not sure what more you need to recognize a rotting carcass of a stock, but for a recap : Poor fundamentals, single product ex-mommentum stock with a broken mommentum, horrible TA graphs in a bear market.

It doesn't have a prayer, so yea, I am disgruntled, but not "with the market in general".

I am disgruntled with people that are willing to offer poison as advice, on the theory that the gullible fools ingesting it won't know, and by the time they figure it out it will be too late anyway. That'd be people like you.

[.crazylegs..]

Alton P. - wow, who peed in your wheaties? Funny you attack me personally yet have no idea of my investing pedigree or anything about me, just a single comment. it's not smart to drive looking through the rear view mirror, especially when going fast. Your valuation metrics are extremely valuable because I always buy stocks by looking at the past, caring little about what the future holds. The technical charts are always giving signals until fundamentals take over. To call RIM's fundamentals poor displays your total lack of understanding for the story. 100% plus earnings and revenue growth? yeah, that is really poor. I'm happy to wait and see how the stock performs over the next few years. that "carcass" will show amazing resiliency. Try to lighten up and enjoy life a little...

[.crazylegs..]

Wow, I didn't even read this quote closely, what a nice little gem:

"...Apple, with 50 years of history as chief revolutioneer under it's belt does..."

i didn't realize that Apple was incorporated in 1958.

[.crazylegs..]

Even more goodies:

"Not anymore, they've seen to that, these professionals. In between Oct 2006, when Greenspan first said "it appears the housing slump may well be already over" through this April and May 2008, I've lost maybe half my money."

you say you have lost 50%? When the mkt is down 20% from the top? and you are pissed at these professionals? BUT you use a bunch of technical data points to tell me what to do? Um, perhaps you should look at the mirror and place the blame on who you see as you appear to be "smart" enough to do technical analysis and make calls about individual securities. As I read your posts, I see everything that is wrong about America. Blame someone else for your mistakes. Why not buck up and take responsibility and say hey, I didn't do my homework, I didn't do the research, I made the mistake. It's so easy to blame everyone else. Just go invest in index funds and stay away from individual securities you hack, you joke, you f*cking chump.

Rant over.

[Alton P.]

So tell me, what's the going rate for prostitution of the written word you shyster ? Does it buy you an Iphone ?

Thanks for the kind words.

I'm glad to see that you're privy not only to my personal situation, far and beyond what I could, hackily know for myself, but even to the degree you know what I'd see in the mirror. I'm also glad (and not surprised) to see you know what's wrong with America.

What I'm somewhat least glad to, is noticing that you've made a good 70 posts around here, the vast majority of them on the topic of how great RIMM is, with just a few unrelated thrown in to, I suppose, add smoke and mirrors ?

A magnificent collection of falsehoods and half-thruths, trying unconvincingly to hitch RIM's oxcart to Apple's hoovercraft. This doesn't surprise on the side of RIMM, which if I recall got caught in 2002 in a payola for analyst buy ratings scheme.

[.crazylegs..]

"What I'm somewhat least glad to, is noticing that you've made a good 70 posts around here, the vast majority of them on the topic of how great RIMM is, with just a few unrelated thrown in to, I suppose, add smoke and mirrors ?

A magnificent collection of falsehoods and half-thruths, trying unconvincingly to hitch RIM's oxcart to Apple's hoovercraft. This doesn't surprise on the side of RIMM, which if I recall got caught in 2002 in a payola for analyst buy ratings scheme."

Are you completely stupid? Look at the dates on those posts and you'll see I have been at it for a while now talking about why RIM really has a true advantage in the mobile space. Since I started posting, the stock has performed amazingly, so if one had heeded my FREE advice (if you even call my posts that), they would have made a lot of money. Let me repeat myself, I do this because I believe what RIM is doing will create significant value. I do not get paid in any way for my opinions. Why would you believe I did? The fact that I have been consistently correct I guess doesn't matter either. In fact, since my RIMM posts started, I have actually made a lot more money in it compared to AAPL, which I have actually owned longer.

As far as the "other" posts designed to "add smoke and mirrors", how does following other stocks have anything to do with RIMM. That doesn't make any sense. How can you believe this is some conspiracy when I am just responding to other posts.

You obviously have some major issues you need to work out. I'm sure there are some great psychiatric institutions near wherever you live. You may want to seek professional help with your conspiracy theories. In the meantime, please use birth control. Ok, I'm done with this. Enough responding to minutia.