Tim Long has turned bullish on Research in Motion.
The BMO Nesbitt Burns analyst raised his recommendation on the Blackberry handheld-device maker to "outperform" from "market perform", and jacked up his 12-month price target to $88 (U.S.) from $70.
His reason? He believes RIM is set to report better-than-expected results for its fiscal fourth quarter ended Feb. 28, and will increase its fiscal 2011 guidance at the same time.
"We expect a meaningful beat and raise when the company reports on March 31," he wrote in a note to clients Monday.
"Strength should be driven by all regions, and the [Blackberry]9700 and 8520 [models]both seemed strong. Competition that we were expecting now seems further away, including a CDMA iPhone, giving RIM the ability to further grab share in the Smartphone segment. We also expect the solid cash flow performance from the November quarter to continue."
Mr. Long raised his fourth-quarter earnings estimate to $1.32 a share from $1.28, and increased his fiscal 2011 forecast to $5.40 from $5.17. The quarterly estimate is 5 cents above the current Street consensus, while the fiscal 2011 call is 3 cents above consensus.
In the wake of the upgrade, RIM's stock was up $2.10 (Canadian), or nearly 3 per cent, to $73.65 a share in mid-morning trading in Toronto. On the Nasdaq Stock Market, its shares were up $2.72 (U.S.), or nearly 4 per cent, at $72.22.
Mr. Long last changed his rating on RIM last November, when he downgraded it to "market perform" from "outperform". Since then, the stock has risen 15 per cent, while the S&P North American technology-sector index has gained 2.3 per cent.