Research In Motion (NASDAQ: RIMM) is
a leading provider of wireless communications hardware, software and services. Company devices allow access to email, telephone, messaging, internet and intranet-based applications. RIM products include the BlackBerry wireless platform and the RIM Wireless Handheld product line. The firm also provides software development tools and makes radio-based modems that other manufacturers incorporate into their portable devices. Competitors include Microsoft (NASDAQ: MSFT), Motorola (NYSE: MOT) and Nokia (NYSE: NOK).
RIM surprised the Street last week, when it reported Q3 EPS of 65 cents and revenues of $1.67 billion. Analysts had been
looking for 62 cents and $1.65 billion. Management also guided Q4 EPS to 66-70 cents (65 cent consensus) and Q4 revenues to $1.80-$1.87 billion ($1.75B consensus). In discussing the solid numbers, the firm noted strong adoption in Europe and improving performance in several emerging markets. Bear Stearns subsequently upgraded RIMM shares to "outperform." JMP Securities and UBS reiterated calls at the same level. RIMM shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with seven "strong buys," sixteen "buys," eleven "holds" and two "sells." Analysts see a 52% growth rate, through the next year. The RIMM Sales Growth rate (21.88%), EPS Growth rate (103.23%), Operating Margin (27.83%), Net Profit Margin (21.13%), Return on Assets (28.58%), Return on Investment (36.21%), Return on Equity (36.95%) and Net Income per Employee ($170.89k) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 71% of the outstanding shares. The stock is one of those used to calculate the Nasdaq 100 Index and the AMEX Internet Index. Over the past 52 weeks, it has traded between $39.92 and $137.01. A stop-loss of $99.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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