Despite Uncertain Market, Analysts Still Bullish on Research In Motion

RBC Capital Markets analyst Mike Abramsky sees plenty of catalysts for Research In Motion Inc. (RIMM) even in uncertain markets, including an exploding smartphone market, new product launches, and resilience against Apple Inc.’s (AAPL)  iPhone.

The analyst gave RIM an outperform rating and a C$165 price target, a 43% upside on current stock price.

He wrote this week that focusing on the rivalry between the two stalwarts should not downplay the larger opportunity that both players stand to take market share from traditional handset players.

Mr. Abramsky even sees a potential upside to this competition, to expand the overall Smartphone sector. He wrote:

We expect RIM to benefit globally from the iPhone launch, similar to the impact of the iPhone in North America (we estimate Blackberry unit sales through AT&T (T) rose 100% above pre-iPhone levels).

The RBC analyst also believes that the sharp drop in RIM stock since announcing first quarter results was an overreaction given RIM’s opportunities in the growing Smartphone market.

His own scenario analysis, including three cases from bear to bull markets, yielded a favorable risk-reward of 34% downside and 77% upside to valuation.

In an interview, Research Capital analyst, Nick Agostino said:

It’s the new handsets that are going to be launched, that represent the main driver.

With them they can maintain a strong position in the entreprise market, one that the iPhone doesn’t threaten, and continue gaining share consumer side. Within the Smartphone market the ones losing out are Sony Ericksson (SNE), Nokia (NOK), Motorola (MOT). Nokia especially.

He echoed the sentiment that the two trailblazers are moving ahead, leaving other competitors to breathe their dust.

Mr. Agostino is also bullish on the stock with a C$175 price target, close to the Bloomberg consensus of C$171 (22 buys, 6 holds and 3 sells).

RIM is going to launch a bevy of new products soon, including the “Bold” a QWERTY-keyboard handset, the “KickStart,” and the TouchScreen “Thunder” which Mr. Abramsky coined “iPhone Killer” in his note.

Both analysts pointed out that RIM also enjoyed a wide channel leverage (over 350 agreements worldwide) and a stellar management team underpinning flawless campaigns execution.

Mr. Agostino said:

The euphoria around the launch of the iPhone is now over, and the limelight is now going to switch back to RIM in the coming weeks.

Comments

[samij]

rimm has next to no presence outside the north america, either in sales and even less in brand recognition. they'd have to invest hugely to gain any significant market share in the rest of the world. the rimm devices have zero appeal in consumer space there.

[.crazylegs.]

umm, samij, how do you explain the 375 carriers worldwide that RIM sells through? and how do you explain that more than 50% of new BB buyers last quarter were outside of North America? please check your facts.

[samij]

crazylegs, pls check your facts. you know that over 90% of cell phone markets are outside north america? rimm sold 50% of bb's in a market that represents 10% of cell phone markets, and 50% in markets that represent 90% of cell phone markets.

in a nutshell, rimm has nice presence in the first mentioned market and next to no presence in the other markets. most of the carriers in the world don't even bother to sell any rimm devices!

the market rimm has outside of the north america is mostly local branches of us companies that dont want to support variety of communication standards.

i never seen an bb "live" outside the us, i happen to live and travel a lot outside the us, no-one who doesn't follow tech sector closely knows what the heck rimm or bb is. the brand is not known, it is never mentioned in media.

ok, there is one thing rimm could do to build something resembling presence outside the north america: buy mot, shut down mot r&d, kill mot product lines and use their distribution network.

[mgrg]

samij is another apple maniac who cannot admit the dominance of RIMM...there is not much that can be said about the issue

[jenny]

The Blackberry itself is a more professional and functional smartphone that appeals to business and professional types because of the reputation surrounding the Blackberry is more serious and sophisticated. While I see the iPhone as an attractive device, I cant help but feel its overrated. In economic uncertainty, professionals will be much more resistant to a recession than college kids and young adults with less disposable income who hold iPhones. Sentiment for RIMM is currently bullish (predictwallstreet.com/...) and predicted to close up according to predictwallstreet.com. I agree with Abramsky in that RIMM's drop last month was an overreaction to its earnings reports and that this new competitive smartphone market is only going to expand the sector.

[jenny]

The Blackberry itself is a more professional and functional smartphone that appeals to business and professional types because of the reputation surrounding the Blackberry is more serious and sophisticated. While I see the iPhone as an attractive device, I cant help but feel its overrated. In economic uncertainty, professionals will be much more resistant to a recession than college kids and young adults with less disposable income who hold iPhones. Sentiment for RIMM is currently bullish (predictwallstreet.com/...) and predicted to close up according to predictwallstreet.com. I agree with Abramsky in that RIMM's drop last month was an overreaction to its earnings reports and that this new competitive smartphone market is only going to expand the sector.