Tuesday, November 30, 2010

RIMM surges on Jefferies upgrade

Shares of RIMM surged 4.81% today to close at US$61.83.  Intra-day, the shares were up as much as 6.63% to US$62.90.  The big move up was due to Jefferies and Co. analyst Peter Misek upgrading RIMM from a "hold" to a "buy", and raising his target price dramatically from US$55 to US$80.

Misek cited three reasons for his upgrade: QNX OS being better and available earlier than expected, strong international sales and slower enterprise share loss than expected.

Two of the reasons that Misek cited for his optimism on RIMM (the merits of QNX OS and strong international sales) were also stated in my Nov. 14 article 5 Reasons to Buy RIMM Now.  Since that article was published on Nov. 14, RIMM has risen 5.15%.

Misek's 45% hike to his target price on RIMM is contrary to many other analysts on the Street.  In recent weeks, analysts have been hiking their EPS estimates on RIMM due to expected sales of the PlayBook.  However, the rising EPS estimates have not resulted in increased target prices or ratings.

In fact, Stifel Nicolaus cut its rating on RIMM from a "buy" to a "hold" on Nov. 17, and Kaufman Bros. did the same on Nov. 9.  Peter Misek deserves credit for seeing past the media and the tech community's obsession with Android's growth, in order to realize the multi-tasking, performance and reliability of the QNX OS.

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