iPhooey! Time to buy RIM, analysts say
Posted
Jun 17 2008, 12:52 PM
by
Kim Peterson
Rating:
This may be the summer of the iPhone, but you wouldn't know it from looking at shares of Research in Motion, which makes BlackBerry smartphones. Take a look at RIM's three-month chart (pictured). The stock has soared 36%, even though Apple and its upcoming 3G iPhone have been hogging all the attention.
Expect the stock to continue to rise in anticipation of RIM's first-quarter earnings report next Wednesday. Analysts and Jim Cramer are gaga over the stock, recommending that you buy now before the price goes higher. Shares were up more than 1% to $142.74 at 11 a.m. PST.
In some ways, you can thank Apple. The company is getting mainstream consumers to pay more attention to smartphones, and that will help BlackBerry expand beyond its core business audience. And I suspect Apple got RIM to rev up its innovation as well, because the company is coming out with some stylish new products this year to compete.
RIM has already announced the BlackBerry Bold. And there are unconfirmed reports that the company will release a touch-screen BlackBerry dubbed the "Thunder" in the thid quarter.
American Technology analyst Rob Sanderson has raised his price target to $205 from $165, saying that BlackBerries are selling well through Verizon and Sprint. And RIM is seeing increasing strength in Europe, he added. RIM only has an 11% share of the global smartphone market. In the U.S., however, its share is nearly 45%, compared with 19% for Apple and 13% for Palm.
Citi analyst Jim Suva suggests investors pounce on any RIM weakness in coming weeks. He's keeping a $165 price target.
A few more things to note for Research in Motion: The stock is close to its 52-week high of $144.50. Its forward P/E is 36.90 and its return on equity is an attractive 40.33%. For its first quarter, analysts are generally expecting $2.3 billion in revenue and an EPS of 85 cents.
Keep in mind that Apple has its share of bullish analysts as well. PiperJaffray's Gene Munster is expecting 45 million iPhones to be sold next year, and that Apple's highly-anticipated "App" software store could turn in to a $1 billion market. Munster's forecast is extremely bullish; other analysts put the figure closer to 25 million. Apple has sold just 6 million iPhones so far.
Surely a good chunk of those new users will be first-timers to the smartphone market. But I suspect that Apple will make a deliberate run at BlackBerry fans, particularly with its new emphasis on business compatibility.
The summer smartphone war is nearly upon us, and Research in Motion investors are already reaping the rewards.
Disclosures: I don't own shares of any companies mentioned in this
post. And while Microsoft owns this blog, Microsoft does not control,
censor or otherwise have any editorial influence over what I write.
Related reading:
Apple's big iPhone news
Answering your iPhone questions
New BlackBerry coming. iPhone who?
Apple takes on BlackBerry for business users
Comparing the iPhone's "true" price
