Montreal - Research in Motion’s turnaround potential has
improved after the struggling BlackBerry maker’s better-than-expected quarterly
results, analysts said, with one summarising his view by saying “the patient
has a heartbeat.”
Analysts said risks remained, with the company’s future
riding on the release of its BlackBerry 10 model early next year, but an
improved cash position provides breathing room.
National Bank Financial upgraded RIM’s stock, while BMO
Capital Markets and Barclays Capital were among brokerages that raised price
targets on the company’s shares.
RIM not only reported a smaller-than-expected loss for the
second quarter, it beat market estimates for revenue and shipments while
arresting its cash burn ahead of the crucial launch of BlackBerry 10.
Subscriber numbers also rose in the quarter, surprising analysts.
"This performance is nothing short of shocking as RIM has
found a formula to entice its global carrier customers to sell (its) product,”
said National Bank Financial’s Kris Thompson.
RIM is offering aggressive pricing for its BlackBerry 7 and
may be discounting on network service fees, Thompson said.
Thompson, who is rated five stars by Thomson Reuters
StarMine for the accuracy of his estimates on RIM’s earnings, upgraded the
stock to “outperform” and increased his price target on the stock to $12 from
The analyst said he expected RIM’s management, which has
succeeded in maintaining the company’s subscriber base, to continue with steps
to sustain that base ahead of the launch of the next-generation BlackBerry
early next year.
Until Thursday’s results, RIM was increasingly being written
off by analysts because of its failure to keep pace with innovations from
rivals such as Apple and Samsung Electronics.
“While RIM delivered marginally better results, we believe
it is still too early to get constructive,” said Phillip Huang of UBS
Investment Research, in a note titled “Not Out of the Woods Yet; 1Q13 Key”. RIM
is expect to launch BlackBerry 10 in the first quarter of the new year.
Huang, who has a neutral rating on the stock, did not change
his view or price target of $9.50.
BMO analyst Tim Long, who said RIM continues to incur
meaningful costs to sell older and uncompetitive products, said the company’s
fate now hinged on BlackBerry 10.
"The app line-up for BB10 still appears very weak,
particularly when compared to (Apple’s) iOS and (Samsung’s) Android,” said
Long, who raised his price target to $8 from $7.
Barclays raised its target to $7 from $6.
William Blair and Co's Brian Nugent, while detecting RIM’s
“heartbeat”, said he was maintaining his “market perform” rating.
led us to be incrementally positive, and we continue to believe that company’s
structural challenges persist," he said.
RIM’s Nasdaq-listed shares shot up more than 20% to $8.60 in
extended trading on Thursday, and were trading around that level before the
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