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Research in Motion’s (RIM-T) shares were pummelled in Friday’s trading on concerns over the company’s weak guidance outlook. BNN takes a look at what the analysts are saying about the technology giant.
RBC (Top Pick, Price Target $90):
Analyst Mike Abramsky at RBC Capital Markets has a $90 US price target for RIM’s stock, saying investor pessimism is unjustified and the company will be able to go head-to-head with its competitors.
“The Q1 miss likely sustains near-term investor concerns over intensifying competition – but we interpret it as transitional,” the author said. “Valuation may remain volatile near-term, however we foresee additional upside as pending launches and Q1 results/outlook help restore confident [sic] in RIM’s competitive advantages and in achievement of their F12 outlook. Execution remains a risk to our view.”
Credit Suisse (Outperform, Price Target $85):
The research team at Credit Suisse says RIM’s international sales will help it offset increased competition and a shrinking market share in North America. The firm has maintained an ‘outperform’ rating on the company’s stock, with an $85 target price.
“Although RIM’s current portfolio is quickly aging, we see several mid to high end offerings for 2H11,” the analysts said. “For this reason, we believe that RIM can sustain a 14% smartphone share in the fast growing smartphone market (we expect 52%/32% volume growth in 2011/2012) with North American share loss offset by international share gains.”
Deutsche Bank (SELL, Price Target $50):
Deutsche Bank ‘s analysts downgraded their rating on the stock from ‘neutral’ to ‘sell’ and lowered their target price to $50, citing concerns about increased competition from phones using Google’s Android operating system.
The analysts also raise concerns about the company’s co-CEO structure: “In all our years covering stocks, we cannot think of a situation where this [co-CEO structure] ended well (with the exception of Motorola where they split the company). We believe there is growing division within RIM and this is evident in the fragmentation of their OS platforms.”
“In short, we think their market dynamics are working against them and we do not have the confidence that they can solve this problem,” Deutsche Bank concludes.
BGC Partners (SELL, Price Target $45):
Colin W. Gillis at BGC Partners maintained his sell rating and $45 price target on concerns over increased competition from Android products and slowing growth in new subscribers.
“Concern on estimate revisions to the downside remain as new smart phone platforms such as Android are taking market share and RIM’s new subscriber growth is slowing and may continue to slow,” he said. “Additionally the company could face increasing pressure for its average selling price, and sustained increased in research and marketing spend.