BlackBerry-maker RIM downgraded by two analysts as threats loom
Research in Motion Inc., the maker of BlackBerry, is having a rotten day.
Despite a three-month rally in which its stock has rocketed up more than 40%, RIM was downgraded from two separate analysts Tuesday, betraying Wall Street's rising ambivalence about the company's prospects.
The analysts, Steve Fox at CLSA and Mark McKechnie at Gleacher and Co., agreed that the stock had reached an equilibrium and was not likely to go up much in the near term.
Fox, who downgraded the stock to "underperform" from "buy" said he was concerned about three factors that could eat into BlackBerry's progress: the probability of a Verizon-based iPhone in the first quarter of 2011, the cost of building a tablet computer that could feasibly compete with Apple's market-leading iPad and encroachment from competitors on RIM's core business: corporate mobile services.
(We wrote about RIM's fight with Apple over the business smart phone market over the weekend.)
In downgrading the stock from "buy" to "neutral," Gleacher analyst McKechnie agreed with Fox. "We cannot justify material multiple expansion from here given our projection of slowing earnings growth over the next 2 years," he wrote. "Seventy dollars is not enough for new money given competitive threats and potential execution risk on product launches..." he concluded.
RIM's stock dropped close to 2% in regular trading.
-- David Sarno
Photo credit: Simon Hua / Flickr