Research in motion is going for the long pass! Will it make it and touch down for the big comeback setup? Will it get intercepted with bad reviews and tough to beat products? or Will it gain just enough distance to keep it in the game?
I definitely don't have the answers to this, but I can definitely offer some insight! Before I get carried away, I'm going to first chastise the american market and many stock analysts from the little and big firms out there that were responsible for the demise of the once great stock.
1) Analysts are all sheep. They are kept in place by a) the herder (who likely has a hidden agenda) and b) the wolves who are ready to pounce on the prey. Let me elaborate on this.
Most analysts spew the same garbage. They'll make vague claims about a stock and then put an arbitrary price target without any explanation. Some will offer a minor explanation, but will rarely go into details about it. For example, RIM was the target of an onslaught of analysts who ran the stock value to below book value. How can a stock be worth less than its assets, especially when they are still generating positive earnings?
2) Have you ever looked into whether these analysts do what they preach?
3) They likely have a hidden agenda, for instance their company may have a short interest on a stock.
4) They follow off one another in overall decision, but will often vary in their prediction. The problem with this is, analysts are supposed to be the scientists and mathematicians of the market. They will explain movements (hindsight 20/20) based off factors. Science and math are supposed to be factual and rigid. This means there is a process to reach a conclusion and due to having the process , it should always arrive at the same answer since their analysis is supposedly based on the same facts, such as numbers.
Inevitably what happens is, the price movement becomes a dependent variable which is based off analysts' bias opinions. The reason why they have this affect is due to the huge following or exposure they have to retail investors. The masses buy into this (no pun intended) due to analysts being put on a holy grail and ultimately end up no better than they were originally. Speaking from experience.
With that out of the way: WHERE IS RIM HEADED?
the positive knowns:
1)RIM is well known and has a strong brand identity.
2) RIM makes good hardware. For its time and focus.
3) RIM has a following.
4) RIM is the leading manufacturer for government communications devices.
5) RIM is unrivaled in the security of information.
The negatives:
1) RIM has a lack of software support. I.E apps.
This can be changed quite easily.
Conclusion?
RIM has a niche market and a strong position in the market it is. Once it manages to win over the general consumer, they will likely be in a position to take the lead. They are currently in the process of this and are meeting this hurdle with the blackberry 10. So you expect the price point to be somewhere in the high teens-$20 range for 2013; provided they actually deliver a solid product.
Considering the recent rally of approx 30-40% over the last few months it certainly looks like it is hending to those projected numbers by me, despite what analysts say. Analysts currently arent even looking at the fact that its below book value, with a market cap of 7bil + assets.
So happy trading ! Let me know what you guys think!
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