AmTech Reiterates Buy on RIM (RIMM) Following Earnings

Broadpoint.AmTech reiterates its Buy rating on Research In Motion (Nasdaq: RIMM) following the BlackBerry maker's Q3 earnings, which were reported yesterday after the market closed. Despite the still bullish outlook, the firm moved its price target on Research In Motion slightly lower from $65 to $62.

The firm calls the RIM quarterly results "a non-event" following its pre-announcment on December 3. Broadpoint.AmTech believes RIM's sales, earnings, subscribers and handset pricing outlook were all positive surprises, but call its gross margin guidance "disappointing". The firm attributes the weak gross margin outlook to:

• upward revision of mix assumptions for higher ASP/lower gross margin products
  
• foreign exchange, which is one-quarter of the lowered margin outlook, and
  
• conservative assumptions on cost reductions.

The firm expects the gross margin outlook to continuing holding back the stock's earnings multiple.

Broadpoint.AmTech notes that Research In Motion has had a strong last 5 weeks, and believes that this strength "is not a near-term anomaly but highlights the early stage of smartphone penetration and RIM's market position."

The firm sees Research In Motion as " the only tech company that is showing strong demand amidst the worst spending environment of our lifetime." Further, Broadpoint.AmTech recommends shares of RIM to any investor who believes that "margins will not continue to head lower."

Shares of Research In Motion are trading 10% higher on the earnings news today. The stock most recently traded at $42.28, implying upside from AmTech's price target of nearly 50% from current levels.

Research In Motion Limited engages in the design, manufacture, and marketing of wireless solutions for the mobile communications market worldwide.

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