Wednesday, February 28, 2007

Calls of Note Part 6

- ThinkEquity notes they believe yesterday's "China Effect" shellacking of the U.S. equity market makes for a compelling buying opportunity in Research in Motion (NASDAQ:RIMM) shares.Firm's Next-gen Computing & Communications universe was down 5.0% on an mcap-weighted basis (compared to 3.5% and 3.8% for the S&P500 and NASDAQ Composite Indices, respectively). From these ashes, they expect RIMM to, as a Phoenix, rise. Firm believes the company is well positioned with the new 8800 alongside the already-proven popular Pearl. They expect a strong upgrade cycle to propel the stock higher. As there is now 19% upside to price target ,they are upgrading to Buy.

Firm's $165 price target reflects a 33x multiple on calendar 2008 EPS estimate of $5.00 and is based on a PEG of 1.5. They believe further significant share price appreciation is now more likely than not given the winning features of the 8800. While they still believe that the competitive environment in the smartphone space is going to get "hot as Hades", they think RIM has a winner on its hands. They encourage investors to take advantage of yesterday's weakness in RIMM shares from the China market fallout.

Notablecalls: Love ThinkEquity's way of reacting quickly to changes in the marketplace. This firm has rebuilt their power, becoming one of the best sell-side research providers on the Street. Jonathan, while I think you will be right about RIMM over the next couple of qtrs, I'm going to suggest that traders use the bounce this AM as a fading oppy. I suspect there are sellers left and they will use any strength to sell into. One to watch.

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