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6 Analyst Opinions on the RIM Resurgence

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The best and worst of what is being said about Research In Motion.

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MINYANVILLE ORIGINAL Over the past few years, BlackBerry maker Research In Motion (NASDAQ:RIMM) has fallen from being an industry titan, to the laughingstock of its field. With Apple's iPhone (NASDAQ:AAPL) and Google's Android (NASDAQ:GOOG) battling it out for the top spot, and Microsoft's Windows Phones (NASDAQ:MSFT) threatening to steal the rest of its market share, most investors felt that RIM wouldn't be around much longer. However, defying expectations, the company's stock price has risen nearly 80% in the last three months with a nearly 16% rise over the last five days.

The stock has recently been updated to a buy rating by Goldman Sachs (NYSE:GS), though analysts are still split over the future of the company. To better discern the fate of RIM, we've collected a balanced group of analyst comments explaining the reason for the company's swift rise and what they think 2013 will look like for the BlackBerry maker.

On the glass-half-full side we have three responses:

Eighty million users ready to upgrade
Among the firms giving RIM a vote of confidence is CIBC, which recently raised its stock price target to $17 from $8. CIBC's analysis notes that RIM has about 80 million smartphone users and a good deal of them should decide to upgrade when the BlackBerry 10 technology becomes available. CIBC's Todd Coupland believes that RIM's stock is "materially undervalued," pointing to BlackBerry's existing subscribers as a source of strength for the company. In response CIBC has put an "sector outperform" rating on both RIM's shares and stock.

Profitability to return by 2014
As stated, Goldman Sachs is advising investors to buy stock in RIM believing that the release of BB10 could help the company return to profitability by 2014. In a recent report, Simona Jankowski, a Sachs analyst, is quoted as saying "We now assess a 30% chance of success for BB10 given positive early reviews, broad-based carrier support, attractive features, and interest by carriers and consumers in broadening the field beyond Android/iOS." Although those odds seem to be banking on a lot, Jankowski seems certain that higher demand for the new, pricier phones should drive up RIM's average smartphone selling price, and with it, the company's profits.

Carrier support boosts optimism
Prominent tech analyst, Peter Miesk of Jefferies & Co (NYSE:JEF), is also giving RIM's BB10 a 30% chance at success, because of the surprisingly strong support among wireless carriers. He is quoted to have said "Preliminary results from our quarterly handset survey indicate developed market carriers have a much more positive view of BB10 than we expected… With greater carrier shelf space and marketing support, we now believe BB10 has a 20% to 30% probability of success." Miesk attributes this strong carrier support as the industry's attempt at avoiding a long-term Apple/Android duopoly. He admits that consumer demand will be the "ultimate determinate," but having tried the BB10 for himself, he is confident that it will deliver an experience up to the standard of its rivals.

But the pessimists are out there, too:

Google is way far ahead
On the other hand, despite RIM's recent upturn, analysts from Raymond James (NYSE:RJF) remain static on their projections that BB10 will not return the company to prominence. In a new report, they write, "[W]e provide a simplistic sensitivity analysis of BB10 sales to Research In Motion Limited's revenues and EPS. We estimate that Research In Motion Limited would have to sell roughly 18 million BB10 devices at solid economics (~$100 gross profit/device) in order to recover to break-even profitability." The Raymond James analysts admit that this task might not be too difficult, but they still doubt BB10 will do enough to differentiate itself from Android, and steer new users away from Google's OS.

It's too late
Morgan Stanley
(NYSE:MS) analyst Ehud Gelblum agrees with the analysts from Raymond James, stating that BB10 is simply "too late" to fix the company. While Gelblum is impressed with the company's gains despite the Nasdaq's (INDEXNASDAQ:.IXIC) decline over the past month, he found little interest in supporting BB10, and declares that RIM is "uninvestable in the near term."

Best value is $7-$8 range
Wedge Partners analyst Brian Blair also suspects BB10 won't save RIM, claiming that the recent positive vibe has "provided false hope for investors." Blair strongly believes that in the post-Android market, it will be incredibly difficult to attract consumers who have many better established rivals. He views the optimism to be similar to that which was evident for the launch of Google's Playbook tablet, which missed anticipated sales numbers. In a recent Forbes article he is quoted as saying, "[I]n our view, RIM, with its declining ASPs and revenues as well as market share losses in key markets is better valued in the $7-$8 range, several dollars above its roughly $4 cash/share position, given the uncertainty of profitability next year and the high likelihood of weak sales of BB10 devices."

In the end, reports are mixed, but more and more analysts are throwing their hats into the ring every day. As of publishing time, RIM's stock price is up 4.01% for the day, indicating that the market is still optimistic on its future.
No positions in stocks mentioned.
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