Monday, November 20, 2006

Calls of Note Part 5

Merrill is raising their 12-month price target on Research in Motion (NASDAQ:RIMM) to $165 from $135 on stronger than expected trends in RIM's new consumer Pearl smartphone. S

Firm expects an imminent launch of the Pearl at Cingular, with some stores indicating shipments as early as this week. Cingular is largest US wireless carrier, and Pearl launch could support F4Q (Feb) outlook.

Pearl's thin form factor is a major shift from RIM's previous bulkier models, and they believe it is creating a strong buzz in Europe. IDC projects Western Europe smartphone sales to grow at 38% CAGR till 2010, ~1.4x faster than the 28% CAGR for overall market. Over 14 European carriers have launched the Pearl incl. Vodafone, O2 and T-Mobile.

ML believes RIM has been more aggressive in promoting low-price mobile data plans for consumers vs. its hardware-only rivals. T-Mobile's Pearl data plan at $19.99/mo is among lowest in the industry; they expect similar aggressive mobile data plans at other carriers.

CY08 pro-forma (ex-ESO) EPS estimate goes to $5.22 (vs. $4.86 previously). Maintains Buy.

Notablecalls: UBS beat ML by a couple of days, raising their tgt to $160 on Nov 16. The stock has doubled since August and I think that if today's tgt raise gaps the stock up more than a point one should be looking for a fading oppy.

1 comment:

notablecalls said...

Lousy call!