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RIM Soars After Goldman Sachs Raises Rating to Buy

By Hugo Miller
November 29, 2012 4:15 PM EST 10 Comments
A man browses on a BlackBerry Bold handset, made by Research In Motion Ltd.
Photographer: Jason Alden/Bloomberg
A man browses on a BlackBerry Bold handset, made by Research In Motion Ltd.

Research In Motion Ltd. (RIM) gained after Goldman Sachs Group Inc. (GS) upgraded the stock to buy, saying the new BlackBerry 10 phones could help it return to profitability in fiscal 2014.

RIM advanced 4 percent to $11.54 in New York. 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.

Goldman’s upgrade is the latest in a wave of higher analyst ratings amid fresh optimism for the new BlackBerry 10 phones, which are set to go on sale in February. While RIM’s current BlackBerry lineup continues to lose market share to Apple Inc. (AAPL)’s iOS and devices that run Google Inc. (GOOG)’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.

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.

Jankowski, who previously rated the stock neutral, lifted her 12-month price target to $16 from $9.

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.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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