Thursday, August 14, 2008

Research in Motion (NASDAQ:RIMM): November could be a blow-out quarter for RIM - Merrill Lynch

Merrill Lynch is out very positive on Research in Motion (NASDAQ:RIMM) reiterating their Buy rating and $170 PO on RIM, heading into a seasonally strong Sep-Dec period which also coincides with the contract renewal/device upgrade timeframe for the older Blackberry 8700 and Blackberry Pearl customers. Firm believes street expectations are low – especially for the November quarter that could feature 2 to 3 new product launches with multiple global carriers and couldbe a blow-out quarter for RIM. Valuation remains compelling at 26x CY09EPE, relative to expectations for 35%+ annual EPS growth rate for next 3-5 years.

Currently consensus estimates are for RIM’s shipments to grow from 6.1mn units in F2Q09 (Aug) to ~7mn units in F3Q09 (Nov). This QoQ growth of ~0.9mn units is the same as last year’s growth in the same period, which seems extremely conservative as RIM could launch 3-4 new platforms (**) within F3Q09, AND has 1.5x more subscribers than last year with pent-up demand for upgrades. Firm forecasts 7.1mn units for F3Q and believes shipments could be closer to 8mn to 9mn units, or 10%-30% above current street expectations

Notablecalls: I was just talking to one smart trader about RIMM yesterday. He was taking some long just before the close noting the last 3 day retracement was on really light volume.

So, today we have MLCO out with a uber-bullish call on the name. The call stands out from the consensus and I expect the stock to hit at least $130+ on it.

1 comment:

The HardHead Fund said...

Well now... this is indeed interesting. As I stated before here I think the iPhone will sell 20-25 million units this year. RIMM on the other hand I think has peaked. The new models Bold n Thunder will not be good enough to keep users from switching to the iPhone. The RIMM app store is laughable trying to copy Apples. BLOW OUT - we will see soon. I think this report is manipulative in nature. I tend to believe one of the Merrill Lynch funds made a bad investment lately in RIMM and needed a boost. Naw... they would never do anything like that!

Thanks for this blog - excellent as always!

HH