Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB)’s shares dipped 2 percent in Friday early morning trading following a downgrade from MKM Partners. The research firm downgraded Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) from Neutral to Sell, lowering their price target from $12 to $10.
MKM’s negative outlook is grounded on the belief that the Blackberry 10 will fail amid unconvincing sales momentum in the U.K. This comes as a surprise considering earlier reports which indicated overwhelming demand in the market. In fact, one of our reports at the beginning of the month noted that some wireless retailers in the UK had outsold the device. In addition to the slowing sales momentum, MKM also argued that further testing of the device suggested that it would fail.
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More so, MKM is inclined to believe that the Blackberry 10 does not extend preferred applications to users. According to the firm, the absence of popular applications could negatively affect the success of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB). MKM remarks that the Blackberry 10’s operating system has less than 5 percent of the iOS’s most popular applications. MKM also comments that the new operating system nests less than 10 percent of Android’s most preferred applications. In addition, the research firm contends that the Blackberry 10 lacks a key a differentiating factor from its rivals, suggesting that the device will be unable to create a unique selling point for itself.
Sell-side analysts seemingly appear to be divided on whether or not Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) is a good play. As we reported last week, Canadian based research firm, Canaccord Genuity, published a bearish report on Research in Motion. Canaccord reiterated its sell recommendation and slashed the price target to $9, arguing that carriers will not build large inventory levels for the Blackberry 10.
This bearish outlook by a section of analysts has been accompanied by several bullish cases from other analysts, suggesting a developing sell-side divide. The bullishness in this case has been driven by the overwhelming carrier support for the Blackberry 10 and the huge demand for the device in Canada and the UK.