RIM (NYSE: RIM) shares have enjoyed an unlikely rebound this year. Following the release of third quarter results, investors were surprised by the positive results and strong cash flow positions, which sent the stock price up. Now, an upgrade from Goldman Sachs (NYSE: GS) are pushing the price even higher.
RIM advanced 4 percent to $11.54 in New York yesterday. The Waterloo, Ontario-based company’s shares have gained 46 percent since the end of October and advanced on 10 of the last 11 trading days, though the stock is down 20 percent this year. Blackberry, the firm’s core product, may not have the panache of an iPhone or Samsung’s Galaxy products, but remains a ubiquitous presence in corporate America. The firm’s goal of releasing Blackberry 10 next year offer promising potential for a firm many feared earlier this year would go out of business.
Fresh optimism for the new BlackBerry 10 phones, which are set to go on sale in February of 2013, may continue to push this wave forward. While RIM’s current BlackBerry lineup continues to lose market share to Apple’s iOS and devices that run Google’s Android software, the new phones may change that, said Simona Jankowski, a Goldman analyst. “We now assess a 30 percent chance of success for BB10 given positive early reviews, broad-based carrier support, attractive features, and interest by carriers and consumers in broadening the field beyond Android/iOS,” she wrote in a research report today. Jankowski, who previously rated the stock neutral, lifted her 12-month price target to $16 from $9.
Higher demand for the new, pricier phones should also drive up RIM’s average smartphone selling price and deliver improved profitability, Jankowski wrote. That should help RIM return to profit in the fiscal year ending February 2014, with earnings of 20 cents a share, she said today. Her previous forecast was for a loss of 52 cents a share in fiscal 2014. The BlackBerry’s share of smartphone sales fell 6.9 percentage points to 1.6 percent over the 12-week period ended Oct. 28 from a year earlier, Kantar Worldpanel ComTech said this week in a report. The iPhone’s share more than doubled to 48 percent, fueled by the debut of a new model.
The road back for RIM remains long – a decade ago the firm enjoyed unprecedented success in the mobile phone market, fueled by growing consumer demand. As new products have entered the market place aimed strictly at the consumer market, RIM sales have fell consistently. The coming months will be critical for the firm’s long run survival.
