UPDATE: Jefferies Upgrades RIM (RIMM) to Buy, Boosts PT; Getting Mega-Bullish on BB10

(Updated - January 18, 2013 7:19 AM EST)

Research In Motion (Nasdaq: RIMM) is ticking higher early as Jefferies upgraded the stock from Hold to Buy while raising its price target from $13 to $19.50.

Analyst Peter Misek noted that RIM's new BlackBerry 10 operating system will enable corporate email on Apple (Nasdaq: AAPL) iPhone and Google (Nasdaq: GOOG) Android devices. He notes that the market is unaware of this change, or may have been overlooking it.

Misek also made the following points on support for BB10: "1) Our checks indicate that the carriers have agreed to volume commitments for the first two quarters post-launch. 2) Our checks indicate that BB10 builds have been raised from 500K/month in early Dec to 1M-2M/month. 3) Developers are supporting BB10 more than we expected. RIM is targeting 70K BB10 apps available at launch."

RIM is also likely to add bring-your-own-device (BYOD) sandboxing, with BlackBerry Messenger on iOS and Android.

Misek sees May and August quarterly results likely coming in above consensus estimates. He sees RIM meeting or beating Jefferies' BB10 sales estimate for four million BB10 devices per quarter. Reasoning is that RIM's installed base is about 20 million to 30 million in developed markets, which could afford the new operating system and that that base has been "starved" for a "legitimate upgrade opportunity." The firm is modeling an upside to 51 million handsets for fiscal 2014, which starts in February, with hardware margins in the high-20 percent range.

RIM's sub base may also be more insulated from BB10 upgrades: Misek notes that RIM shares fell last month when the Company said many BB10 subs wouldn't generate service revs. He comments, "While a bit of a double-edged sword as it limits the BB10 TAM, RIM's sub base is skewed toward emerging markets with extended replacement rates, which should push out the impact of RIM's business model shift toward that of a typical handset OEM."

On services, Misek believes RIM is cutting fees for volume commitments from carriers. He notes, "This ASP estimate is -13% Q/Q as we think developed market sales will be at close to a standstill ahead of BB10 and that the mix shift toward emerging markets and discounting to clear the channel will hit ASPs."

For RIM's February quarter, Misek and crew see a loss of 42 cents per share on revs of $2.5 billion, seven million handset shipments, and an average selling price of $200 per unit. He comments, "This ASP estimate is -13% Q/Q as we think developed market sales will be at close to a standstill ahead of BB10 and that the mix shift toward emerging markets and discounting to clear the channel will hit ASPs."

For the May and August quarters -- mentioned above -- Misek sees revs of $4.2 billion, EPS of 33 cents and revs of $4.1 billion, EPS of 32 cents, respectively. ASP of $393 and volume of eight million handsets is the same for both quarters.

RIM is indicated higher Friday morning.

For an analyst ratings summary and ratings history on Research In Motion Ltd. click here. For more ratings news on Research In Motion Ltd. click here.

Shares of Research In Motion Ltd. closed at $14.91 yesterday.

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