Shares of Research In Motion (RIMM) were pushing ahead 6.6% in morning trading, following an upgrade by Goldman Sachs.
In a note out this morning, analyst Simona Jankowski upgraded the stock from Neutral to Buy with a $16 target price. She writes that the move is predicated on positive risk/reward heading into the January launch of the BlackBerry10, as she sees a 30% chance of success for the new model, based on interest from consumers, carrier support, and good early reviews.
�For the first time in 3 years, we think out-year Street estimates are too low, as they don�t capture: (1) the ASP lift from BB10; (2) the associated margin improvement; and (3) the channel inventory fill for BB10,� she writes. �We expect RIM�s results will exceed Street estimates over the next 4 quarters, with our revenue estimates 8% and our quarterly EPS $0.14 above consensus on average.�
Jankowski also believes that RIM will be profitable in fiscal 2014 (while the Street still expects losses): �The primary source of upside is our FY14 smartphone ASP estimate of $270, up 21% yoy vs. the consensus view of roughly flat, as we expect BB10 devices priced at over $400 will drive more than a third of the total volume, offsetting sharp declines in emerging markets where ASPs are much lower.�
She raised her fiscal 2013, 2014 and 2015 earnings estimates to a loss of 99 cents per share, a 20 cent per-share profit, and a loss of 62 cents� per share, respectively.
RIMM�s stock has had a wild ride of late, starting with another bullish note, from National Bank before Thanksgiving. In just the past week several analysts have written about their skepticism concerning the shares’ rise, while yesterday a Swedish court dealt the company a blow in its patent licensing argument with Nokia (NOK).
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