RIM is bloody but not dead yet, RBC says

In a note to investors Friday morning, RBC Capital Markets Managing Director Mike Abramsky lowered his target on shares of RIM stock from $45 to $35 with a Sector Perform rating. Following yesterday’s bloodbath, shares of RIM stock plummeted by as much as 19% after-hours on concerns surrounding RIM’s second-quarter and full-year outlook. The Waterloo, Ontario-based company slashed its full-year EPS outlook from $7.50 to between $5 and $6.50, and it said second-quarter earnings could be as low as $0.75 per share. Abramsky remains cautiously optimistic, however. “Disappointing Q1 results validates prior execution concerns amidst competitive pressures,” he writes. “Although it’s possible RIM fails to turn itself around, that outcome may be premature, we believe, given sustained positives.” The analyst notes 16% year-over-year growth, 68 million total subscribers, service growth and enterprise leadership among the yesterday’s bright spots, and says RIM’s strategy with QNX, TAT-built user interfaces and Android app support “remains sound.” He adds that the impact of BlackBerry 7 devices this fall and then QNX-based handsets, which are expected in the first quarter of 2012, could make RIM an “attractive acquisition candidate.”

Tags: BlackBerry, blackberry bold, BlackBerry Playbook, Earnings, Guidance, Margins, market share, outlook, profit, RBC, revenue, RIM, Sales, Shipments

Zach Epstein