Top-Rated Analyst Suggests Selling Research In Motion (RIMM)
Credit Suisse downgraded Research In Motion Ltd. (Nasdaq: RIMM) from Neutral to Underperform. The firm is the top-rated analyst covering the stock, according to Bloomberg data, so the rating change may carry some weight. The firm sees overall slower smartphone sales and gross margin risks.
The firm cut their FY10 EPS estimate to $2.94 and introduced FY11 EPS of $3.46, below the consensus. They also cut their price target from $45 to $37. With Research In Motion closing at $50.42 yesterday, the price target represents 27% downside.
Credit Suisse lowered their smartphone industry volume forecasts to 154 million in 2009 and 177 million in 2010 amid signs of slowing smartphone growth and concerns over affordability.
Credit Suisse also sees less leverage than expected, saying hardware GM may languish at around 35% for FY10 leading to a group OM of 20.9% with risks to the downside given several structural factors.
UPDATE: Shares of Research In Motion are trading down 1.3% to $49.71 in this morning's pre-market session.
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