(Updates with closing share price in seventh paragraph.)
June 22 (Bloomberg) -- Research In Motion Ltd., which has had its rating cut by eight analysts in the past week after lowering its sales and profit outlook, was rated “outperform” by Macquarie Capital Inc., which began covering the stock today.
Kevin Smithen and Scott Thompson, New York-based analysts with Macquarie, set a 12-month price target of $40 for the BlackBerry smartphone maker, which is trading below $29. The gloomy outlook for Waterloo, Ontario-based RIM is predicated on its declining U.S. market share and doesn’t give enough attention to the company’s still robust international sales growth, they wrote.
Outside North America, “markets are fundamentally different,” they said. “Carriers are incentivized to promote RIM over other smartphones.”
RIM dropped 27 percent over two days after cutting its full-year outlook June 16 and giving a forecast for sales and profit this quarter that missed analysts’ estimates. While Macquarie said that BlackBerry’s data-efficiency and lower pricing make it popular in Latin America and East Asia, there is growing concern that RIM may lose market share in those international markets just as it has done in the U.S. to Apple Inc.’s iPhone and handsets based on Google Inc.’s Android software.
Of 55 analysts who rate RIM, 11 recommend buying the stock, 29 say hold it, and 15 give it a “sell” rating.
“RIM’s numerous challenges have been well documented,” said Smithen and Thompson. “We view these risks, both self- inflicted and structural, as formidable but not yet insurmountable.”
RIM fell 15 cents to $28.40 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has dropped 51 percent this year.
--With assistance from John Lear in Chicago. Editors: Niamh Ring, Romaine Bostick
To contact the reporter on this story: Hugo Miller in Toronto at firstname.lastname@example.org
To contact the editor responsible for this story: Peter Elstrom at email@example.com