Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) “or Blackberry” will be reporting earnings in several weeks. Canadian based Canaccord Genuity is the first firm to issue an earnings preview. As we noted recently, Canaccord Genuity is pretty bearish on Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB). In the latest report the analysts re-iterate their sell with a $9 price target using a sum or parts analysis as they expect the company to explore a sale.
Investment recommendation from Canaccord Genuity: Their global surveys post the recent BlackBerry Z10 launch indicated mixed initial sales with limited initial supply cited as the reason for early post-launch stock-outs at some carrier stores during the first week of launch.
Their follow up surveys have indicated steady but modest sales levels for the Z10. With new BB10 smartphones launching in the U.S. only in mid-March or later at subsidized prices no better than competing high-end Apple/Samsung smartphones combined with their expectations for the Galaxy S IV to launch at a similar time frame in the US market, they anticipate Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) will struggle to reclaim high-end smartphone market share.
Investment highlights
Given their store surveys indicated modest Z10 sales in the U.K. and Canada with limited initial inventory levels, the analysts reduced February quarter sell-in estimates too low for the first month of the Z10 launch. With the Z10 launching in additional markets the last weeks of February, they have increased their February quarter BB10 smartphone sell in estimate from 300K to 800K units.
However, carrier support for Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) 10 in the U.S. is modest, as demonstrated by Sprint only planning to launch the Q10 and T-Mobile only the Z10. Further, they anticipate carriers will not build large inventory levels for BB10 devices consistent with prior BB7 high-end launches and will stock modest levels given the weaker consumer demand for high-end BlackBerry smartphones.
With the belief Blackberry supply improved throughout February, Canaccord Genuity has increased their February quarter BB10 estimates resulting in their F2013 loss per share estimate decreasing from ($1.18) to $(1.06). Their F2014 and F2015 estimates remain unchanged, as they believe that BlackBerry will struggle to drive enough BB10 demand to return the company to sustained profitability.
