Analyst Report - ConcordeResearch In Motion Ltd.
RIMM : NASDAQ : US$118.35
RIM : TSX
BUY
Target: US$225.00
COMPANY STATISTICS:
52-week Range: US$80.14-148.13
Avg. Daily Vol. (000s): 17,768
Market Cap (M): US$68,010
Shares Out (M) basic: 563.6
Shares Out (M) diluted: 574.6
EARNINGS SUMMARY:
FYE Feb 2006A 2007A 2008A 2009E 2010E
Revenue (B): 2.1 3.0 6.0 12.4 18.9
EV/Sales (x): 31.9 21.7 11.0 5.3 3.5
EPS: 0.83 1.10 2.26 4.80 7.56
P/E (x): NM 107.1 52.4 24.7 15.7
COMPANY SUMMARY:
Research In Motion Ltd. is a designer, manufacturer and
marketer of wireless solutions for the mobile
communications market. Through development and
integration of hardware, software and services, the
company provides solutions for access to information
including email, messaging, Internet and intranet-based
applications.
All amounts in US$ unless otherwise noted.
Technology – Communications – Communications Technology
AGGRESSIVE BOLD PRICING AT
VODAFONE UK BODES WELL FOR
DEVICE UPTAKE
Event
Vodafone UK released the pricing and availability of the BlackBerry Bold
yesterday. The smartphone prices range from free to GBP187 with a 12-
month contract. The most economical plan lets customers have the Bold
for free with a GBP30 12-month service contract.
Impact
Positive. We believe the pricing is aggressive, and therefore it should
promote solid uptake of the Bold by both upgrade and new customers. We
expect that Vodafone’s actions will add further fuel to what should be an
already outstanding November quarter driven by new product launches.
We reiterate our view that AT&T is likely to launch the Bold on September
15. We expect US exclusivity to expire at the end of October, which will
open a window for T-Mobile to launch the device in November.
Action
We view the recent share price weakness as a buying opportunity for
RIM. Bold sales to date have met or exceeded the company’s
expectations, in our opinion. We expect RIM’s momentum to build with
broader availability of the Bold and new launches for the Thunder and
Kickstart. As such, we reiterate our BUY rating and US$225 12-month
target price based on our DCF and industry comps. Our target implies a
30x multiple on our F10 EPS estimate of US$7.56.
Valuation
RIM continues to trade a premium to peers with a 4.7x FTM EV/sales
(average is 1.7x) and a 22x FTM P/E (average is 14x).