Friday, December 14, 2007

Research in Motion (NASDAQ:RIMM): Goldman Sachs and Citigroup positive ahead of results - Shortcrusher?

Couple firms are out positive on Research in Motion (NASDAQ:RIMM) ahead of its FQ3 results scheduled for Dec 20:

- Goldman Sachs notes that investor concerns around a weakening financial services IT spending environment have pressured shares down from $130 levels to $100. Firm sees the effect of weaker financial services on RIM's performance as minimal, because the majority of RIM's growth is coming from new channels in new markets (China, Russia, Eastern Europe, Latin America), rather than increasing penetration at large US financial services firms. Maintains Buy and $147 tgt.

- Citigroup says RIMM was a very strong performer in 07, and they think it is the stock to own for 08. It is a pure-play in one of the fastest tech markets (smartphones) and should grow sales at 57% and see EPS growth of 66% in CY08. Contrasting PALM, RIMM should be at least inline with cons. of $1.65B and EPS of $0.62; CIR estimate is $1.61 billion/$0.60. Cons. calls for 3.85 mln units; Citi's model has RIM shipping 3.7 mln units. Feb-Q estimates have edged down recently, but they think strong trends continue for RIMM into 2008, despite recent macro and financial services concerns. Reits Buy and $140 tgt.

Notablecalls: There has been some negative chatter on RIMM over the past weeks but I think we won't see a disappointment from these guys. At least not yet. Even if we get in-line results, the stock has already taken a 30% haircut and will likely crush the shorts. The thing is, RIMM has gotten way too popular among shorts lately.

I think supportive comments from GSCO and Citi will likely cause the stock to trade up today. Hitting $108 is definitely a possibility today.

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