[Homo Erectus]

TORONTO - Shares in Research In Motion are overpriced and the BlackBerry maker's new operating system likely won't return the company to profitability, says an analyst who has put a "sell" rating on the stock.

Canaccord Genuity analyst Michael Walkley has set RIM's share price at US$10 � substantially lower than estimated share prices issued by other analysts in recent weeks.

Shares in Research In Motion (TSX:RIM) were down 10 cents to $11.49 after the report by Cannacord Genuity was issued.

While the BlackBerry 10 operating system is more competitive with Apple's iPhone and Android smartphones, there will be limited consumer demand, analyst Michael Walkley said Monday.

"Our checks do not indicate the consumer pull, carrier push, or developer excitement necessary for BlackBerry 10 to reverse the challenging trends faced by RIM in order to return the company to sustained profitability," Walkley wrote in a research note.

"As a result, we downgrade to 'Sell' based on our $10."

BlackBerry 10 will be unveiled on Jan 30 and is widely considered a make-or-break product for the Waterloo, Ont., smartphone maker.

Walkley said RIM will not be able to continue as it is.

"Given our belief that BB10 smartphones will struggle to gain sustainable traction in the highly competitive smartphone market, especially with a launch date post the important holiday season, we believe RIM may eventually sell assets, sell the entire company or materially change its business model to a smaller niche supplier."

A sum-of-parts analysis attempts to calculate what a company would be worth if some or all of the business were sold, rather than continuing as an independent entity.

Walkley said he values RIM at roughly US$5.27 billion or the sum of $2 billion for the enterprise subscriber base and server architecture and $3.27 billion for its patents, resulting in a $10 price target per share.

Other investment firms such as National Bank and CIBC have increased their share price targets to US$15 and $US17 respectively. Montreal-based MacDougall, MacDougall & MacTier increased its share price to $10 from $7.

But analyst Brian Blair of New York's Wedge Partners has said rising expectations for BlackBerry 10 have provided false hope for RIM's investors.

Blair has said he believes RIM is better valued at US$7 to US$8 range, given the uncertainty of its profitability next year and the "high likelihood'' of weak sales of BlackBerry 10 devices


Read more: Canaccord Genuity says RIM shares are overpriced and puts a 'sell' on its stock

[playbookster]

They are too little too late with this analysis

[Superfly_FR]

I spoke with an European CEx of a major Wordwide carrier yesterday [salt it, doubt it... but can't say more].
They are going to support BB10 at a very high level. "Push" doesn't seem an option for any device maker these days; in a crisis situation, each must take its part of risk.

[kw9700]

Would VERY MUCH like to see Chris Umiastowski's opinions on this report in a blog post. I'm sure he's already writing it up...

[Nindia]

canaccord bankrupt - Google Search

[randall2580]

Most of the other reports I have read give BB10 a "30 percent" chance of success. This guy gives it zero from what I read above. What does 30% success mean for a $10 expectation, probably similar to the 15's, 17s from some of the others. Guess it all boils down to how much of a chance you believe BB10 has in being successful.

[Nindia]

An investment firm that has been closing down shop all over the country has no credibility in my opinion.

[RubberChicken76]

Most of the other reports I have read give BB10 a "30 percent" chance of success.

Or more specifically, one guy, quoted a lot, gives it a 30% chance of success. Peter Misek from Jeffries.

[TomJasper]

Anybody who has been investing the last 20/30 years knows full well Canacrap (aka Capital) are Howe st. louts,scammers,P&D'ers,bottom feeding scum and basically can't be trusted to say anything honest.

In a nutshell their words mean nothing, stay far away from them because a leopard never ........ well you know.

[Nindia]

Anybody who has been investing the last 20/30 years knows full well Canacrap (aka Capital) are Howe st. louts,scammers,P&D'ers,bottom feeding scum and basically can't be trusted to say anything honest.

In a nutshell their words mean nothing, stay far away from them because a leopard never ........ well you know.

Hit the nail on the head. They've got a reputation for facilitating pump and dumps. They're a joke.

[Rickster1]

Well, just to clarify a bit, Peter Misek used to be the analyst at Cannacord, now at Jeffries and co. he has been super negative for two years until recently. Goldman Sachs has also upgraded RIM to a $16 target with a 20 to 30 per cent chance of success. Either way we shall see what unfolds. Remember these analysts are trying to see the future and usually do a poor job of seeing trends until they are happening. Only time will tell. RIM can only do whag it does and then see what the consumer does. I think there has been a major sea change take place. the iphone 5 is being marketed as "thinner" and "lighter". that's it, no emotional link as there has been in the past. win8 is dead on arrival. consumers are pretty savvy and do not like to see too little competition. if RIM haz a decent product they are positioned to do well. only time will tell though.

[Lehomer]

It looks to me that Canaccord was just looking for free press.
.

An investment firm that has been closing down shop all over the country has no credibility in my opinion.

[randall2580]

Or more specifically, one guy, quoted a lot, gives it a 30% chance of success. Peter Misek from Jeffries.

Guess you didn't catch the Goldman Sachs report?

[BB10BelieveIt]

The Interesting thing is the stock barely budged on this sell rating; lately there has been a panic selling off on 'news' like this with a bounce back up the following days. That to me is a very positive sign; namely when a stock stops responding to 'bad' news. Lately all the 'bad' news has been pure fluff. (like poorly defended sell ratings where it is obvious that the analyst has not got a clue what is coming)

[Superfly_FR]

Guess you didn't catch the Goldman Sachs report?

IN G.S report, the BB10 failure is well identified, but the interesting part is that even in the worst scenario (BB10 not successful) they value the share at ... $10.

Our price target of $16, now based on a scenario analysis (vs. purely SOTP
prior), assigns 70% probability to our base case, which values RIMM at $10
based on SOTP ($6 in IP, $4 in cash), and 30% to our bull case, which values
it at $31 based on a 10X P/E applied to our bull case CY14 EPS of $3.08.

Additionally, let's note that this Canacord downgrade had a very minimal effect to the stock valuation ...

[bk1022]

You have to understand that the recent run up in stock price is probably related to people having a better understanding of what RIM is worth if it "shareholder value" were unlocked. Couple with that a non-zero chance of success and there you are.

You should not misinterpret the manifestation of a small reversion in stock price to mean people think the company is a success, since you can't know if that is the case.

[hkkelvinlee]

Tell them to sell to me at 10!!

Sent from my BlackBerry 9800 using Tapatalk

[Double_J75]

Rim needs to surprise investors with its up coming quarterly statement. If they can put a positive spin on it then they can keep the positive movement right in to the launch.

[ibpluto]

Here in lies the gamble. Speak with most analysts one on one, and they will tell you that what gets reported on December 20th is telling if RIM holds or drops. If they can once again like they did last quarter report holding subscribers (don't even need to add like they did the last time), and not show a bleed of loss as high as predicted, they will rocket up.

Until December 20th, don't expect much movement on the mid $11 price.

If you have a set, place your bets before the 20th.

[TomJasper]

I would expect Dec 20 to be worse than last 1/4 but I would also expect that to be expected as they have been ramping down their product line for a whole new BB10 operating system. Hard to sell older stock/product when the public knows BB10 will be here very soon. Myself I won't really put much thought into Dec 20, Jan 30 is the real drum roll.

Here in lies the gamble. Speak with most analysts one on one, and they will tell you that what gets reported on December 20th is telling if RIM holds or drops. If they can once again like they did last quarter report holding subscribers (don't even need to add like they did the last time), and not show a bleed of loss as high as predicted, they will rocket up.

Until December 20th, don't expect much movement on the mid $11 price.

If you have a set, place your bets before the 20th.