Research In Motion soars 51 pct ($69) as outlook dazzles
Tuesday December 23, 4:56 pm ET
By Jeffrey Hodgson
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TORONTO, Dec 23 (Reuters) - Research In Motion Ltd. (Toronto:RIM.TO - News; NasdaqNM:RIMM - News) shares shot up a stunning 51 percent on Tuesday after much stronger-than-expected results and guidance from the maker of the BlackBerry e-mail device triggered a wave of analyst upgrades.
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Stock in the Waterloo, Ontario-based firm jumped $23.51 to $69.61 on Nasdaq, at one point touching $69.93, its highest level since January 2001. With volume of more than 58.3 million, RIM was the most active stock on Nasdaq.
In Toronto, the stock rose C$30.56 to C$91.98 on volume of 3.65 million shares.
"It's pretty straightforward. The company reported very strong numbers last night, and gave what I would view as extraordinarily strong guidance. The company seems to be firing on all cylinders," said Howard Lis, senior technology analyst at GMP Securities in Toronto.
"When you get moves like this, you're going to get some short-covering, but certainly that's not what has boosted it 50 percent. The earnings estimates of all the analysts have gone way way up."
RIM reported a higher-than-expected third-quarter profit of $16.3 million, or 20 cents a share, on Monday as sales more than doubled to $153.9 million on strong demand for its flagship BlackBerry e-mail device.
But perhaps more importantly, the company also issued much higher-than-expected forecasts for the next two quarters.
"Why react when you can overreact? Obviously that was a very a good quarter. Obviously it was very good guidance...that being said, one does have to address issues of valuation," said Duncan Stewart, a partner and portfolio manager with Tera Capital Corp. who has owned RIM stock in the past.
Stewart noted the company still faces a number of risks, including a patent infringement lawsuit by privately held NTP Inc.
RATING, PRICE TARGETS JUMP
But most brokerages that follow the firm showed little hesitation in raising their ratings and price targets.
J.P. Morgan Securities analyst Paul Coster upgraded RIM to "overweight" from "neutral," citing the "very strong" quarter and guidance and diminishing risks.
"While the stock has appreciated significantly over the past year, we believe significant upside remains, and, in our opinion, management has delivered on the potential of the business model. We believe the altered risk profile of the company warrants our overweight rating," the analyst said in a note to clients.
ThinkEquity Partners analysts Thomas Sepenzis and Jason Tsai raised their rating to "strong buy" from "equal weight," and hiked their price target to $70 from $40.
"RIMM reported a strong quarter but more importantly, the significant increase in guidance gives us higher confidence in its long-term potential," the analysts said in a note to clients.
Scotia Capital analyst Gus Papageorgiou maintained his "1-sector outperform" rating on the stock but raised his one-year price target to C$109 from C$84 and two-year price target to C$130 from C$101.
"RIM is displaying very impressive growth and we believe the company will continue to do so well into next year. Many of the company's new products (integrated voice/data devices, smaller sized BlackBerries, color screen devices) have only recently begun to impact the revenue line," he said in a note.
National Bank Financial analyst Deepak Chopra raised his price target on the stock to $75 from $55 and reiterated his "outperform" rating.
($1=$1.32 Canadian) |
