Analyst Defends RIM; Says Warning Was 'Not the Disaster Many Feared' (RIMM)

December 3, 2008 12:28 PM EST

Broadpoint.AmTech is out with a research note reiterating its Buy rating on Research In Motion (Nasdaq: RIMM), saying last night's Q3 warning was "not the disaster many had feared". The firm said its new price target on Research In Motion "is likely to fall to the $65-$70 range using a 15x target multiple."

Broadpoint.AmTech recommends buying shares of Research In Motion on weakness, however, the stock has now rebounded from intraday lows as value investors have stepped in. The firm notes that RIM's sales guidance implies handset units came in about 600-700K shy of previous estimates. Further, AmTech sees gross margins coming it about 150 basis points below guidance given "product mix and unfavorable foreign exchange as the Dollar gained 17% on the Loonie during the quarter." While the firm does see margins as a concern moving forward, it believes the metric could be "near a bottom as hardware margins should improve as new products ramp."

Notably, the firm believes that a "relief rally is probable."

Shares of Research In Motion are currently trading down just 1% to $36.96 after trading down as much as 8% in after-market trading last night.

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

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