Analysts at Macquarie Equities Research are convinced that the stock price of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) could jump to more than $17 per share on a decent sales performance of the Blackberry Q10.
The Macquarie Equities Research analysts, Kevi Smithen and Zach Horat cited that they remain skeptical on Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)’s medium to long-term prospects due to on-going services revenue decline. However, they noted the stock is poised for another bounce in the near-term citing that the sentiment surrounding the company is overly bearish.
In their note to investors, Smithen and Horat wrote, “We do not agree with bears that there had been adjustments to BBRY’s supply chain and our checks indicate that June qtr. production is actually shaping up to be ahead of initial estimate at key suppliers.”
The analysts also warned investors not to focus much on retail checks for the Blackberry Q10. They said, “We believe this is initially an enterprise product making checks very difficult unless you are polling Fortune Global 500 CIO.” They emphasized that their discussions with major Blackberry carriers suggested that the Q10 is likely a bigger product upgrade for the company’s estimated 13.4 million Enterprise subs than the Z10.
Smithen and Horat estimated that Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) will ship 4.3 million Blackberry 10 units in May and 2.7 million units in August. According to them, their August estimate is conservative given the stronger Enterprise demand for the Q10.
The analysts believed that the Enterprise sell-in in May in the United States will serve as a swing factor. They cited the optimism of Verizon Wireless on the Q10 as its CEO Dan Mead said, “a lot of pent-up enterprise demand for the QWERTY keyboard product.” On the other hand, they noted that the management of Sprint Nextel Corporation (NYSE:S) are less optimistic with the Q10 because it has lower share of major Enterprise customers than Verizon Wireless.
The analysts recommended a neutral rating. They increased their 12-month price target for the shares of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) to $13 from $11. The stock price of the company is trading around $15.59 a share, up by 1.29% on Friday around 2:20 P.M. in New York.
