I'm placing a hold on Research In Motion's (RIMM) shares, first recommended on May 5, 2009 at a price of $77.07, pending its Q4 report in about a month. RIMM will report Q4 EPS on December 17, 2009, and the First Call Q4 EPS estimate is $1.04.
Research's stock chart is poor: it formed a double-top in October, and since that time it is fallen below the key, 50-day moving average, a sign that institutional investors (IIs) are decreasing their positions or exiting RIMM. Further, recently the stock has formed a bear hug – a bearish formation, and it's even struggled to come close to what is now 50-day moving average resistance.
Still, the view from here continues to argue that RIMM's future is bright, with impressive gains in smartphone unit sales and subscriber growth in 2010, but holiday prices may be weak, during an especially-competitive holiday shopping season, as 'frugal consumers' in the U.S. scrutinize every holiday purchase. The latter may account from some II selling, along short-term players taking 2009 profits: earlier this year RIMM rose from about $35 to more than $80 in three months. Even so, the contradicting fundamental and technical indicators trigger the Hold, hence it's stand aside and await further evidence.
The First Call FY2010/FY2011 EPS estimates for RIMM are $4.15 to $4.82.
RIMM will be re-evaluated after its Q4 report.
Stock Analysis: Don't Buy Research In Motion's shares at this time. If you bought shares in May, Hold the shares. Sell/Stop Loss: $37.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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