Research In Motion Ltd, for months enveloped by a wave of negative
sentiment, got a boost on Tuesday when one of its most influential
critics raised his rating on the stock ahead of the launch of RIM's
make-or-break new line of BlackBerry 10 devices.
The upgrade by
Jefferies & Co analyst Peter Misek pushed RIM's share price into
double digits for the first time in five months, with the stock up more
than 3 percent at $10.04 in early trading on the Nasdaq.
Misek
based his more optimistic view of the BB10 launch, set for January 30,
on a favorable reaction by telecom carriers to the devices and the new
operating system that powers them.
"Preliminary results from our
quarterly handset survey indicate developed market carriers have a much
more positive view of BB10 than we expected," Misek said in a note to
clients.
Shares of Waterloo, Ontario-based RIM , a
one-time leader in the smartphone industry, have plummeted in recent
years as its aging line-up of devices lost ground to faster and snazzier
devices from rivals. The company has bet its future on the new BB10.
RIM hopes BB10 smartphones will help claw back market share it has lost in recent years to Apple Inc's iPhone and devices that run on Google Inc's Android operating system.
Misek,
who doubled his price target on shares of RIM to $10 from $5, also
raised his rating on the stock to "hold" from "underperform".
"With
greater carrier shelf space and marketing support, we now believe BB10
has a 20 percent to 30 percent probability of success," said Misek, who
has long been skeptical of RIM's odds of engineering a turnaround.
Misek
cautioned that there is still downside if RIM's gamble on BB10 fails,
but he noted that the stock could be worth as much as $43 within the
next 12 months if RIM's bet pays off and its new operating system gets
licensed by other handset makers.
RIM says its new devices will be
faster and smoother and have a large catalog of applications, which are
now critical to the success of any new line of smartphones. While
feedback from both developers and carriers on the new devices has been
largely upbeat, financial analysts have been much more circumspect about
the company's prospects.
Misek's view is not shared by at least one of his counterparts.
In
a note to clients on Monday, Pacific Crest analyst James Faucette
reiterated his "underperform" rating on RIM's shares. He said regardless
of its quality, there is almost no chance that BB10 will meaningfully
change RIM's trajectory.
RIM shares were up 3.7 percent at $9.95 at midmorning on the Nasdaq, while its Toronto-listed shares rose 3.1 percent to C$9.89.
Copyright Thomson Reuters 2012