Analysts Downgrade Research In Motion's Target Price

Research in Motion’s (RIMM) disappointing second quarter results and third quarter earnings forecast sent the Toronto markets into  a tailspin yesterday and chopped the stock down by 28% to C$72.57. But it also created a tsunami of analyst downgrades.  Here’s a sampling:

Jim Suva,  Citigroup, cutting his target to $90 from 160 and his rating to "hold/high risk" from "buy/medium risk:"

RIM’s . . . stock price decline accurately captures its shockingly negative financial model gross margin revisions. We are also concerned that RIM and the overall handset industry is facing an even more competitive environment due to challenging economic conditions, slower industry growth and the need to spend significantly more on marketing.

Mike Abramsky, RBC Capital Markets, slashing his target price to C$90 from C$165 and downgrading to "sector perform" from "sector outperform":

Although RIM’s fundamentals remain solid, in our view the risks to valuation have risen, along with volatility in the share price; we prefer to remain on the sidelines until RIM’s investments have progressed and visibility improves to margin recovery and growth.

Peter Misek, Canaccord Adams, changing his target to $72.75 from $185 and downgrading to “hold” from “buy”:

Management is clearly showing a willingness to sacrifice near-term operating profits for a chance to become a tier one handset player as the world shifts from cell phones to smart phones. While we can’t be overly critical of the long-term vision, we also can’t ignore the apparent disconnect between the company’s recent spending spree and implied top-line growth.

Brian Modoff, Deutsche Bank, downgrading RIM to “sell” and lowering price target to $70 from $120:

RIM has become more dependent on hardware sales with time. This means that they have to keep running to keep up with changes in consumer tastes and risk missing numbers if their products do not hit.

Jeff Fan, UBS, cutting his target price to $88 from $165 and downgrading RIM to neutral from buy:

Despite the sell-off, we find it difficult to recommend investors step in at current levels given headwind expectations and our lack of conviction to revenue growth upside both near and medium term. . . We do not see catalysts to drive the stock upward in the near-term as competition in the consumer market increases from Apple (AAPL) . . . and others.

Deepak Chopra, Genuity Capital Markets, maintaining buy recommendation, cutting target to $140 from $183:

RIM is undergoing a profound business model change as it tries to grab market share in the larger consumer market. This is bringing gross and operating margins down. The shift is happening more quickly than we anticipated, as the company is transitioning to a new product portfolio. . . . Ultimately, we believe RIM will be able to drive higher earnings as volumes ramp up. . . . That said, the changes are still somewhat of a shock to our model.

Nick Agostino, Research Capital, lowering his target to $140 from $175 but maintaining "buy" rating:

With the company making another major push into the consumer market with new device launches, RIM could once again be at an inflection point on its growth trajectory. However, we note that execution and competitive risks are heightened.