What do investors see in RIM these days? Perhaps a new vulnerability in Apple.
RIM shares have been on a two-month tear, rising more than 85 per cent – and the fact that the U.S. stock market was closed on Thursday didn't affect this enthusiasm: The shares jumped about 16 per cent in Toronto, with heavy volume of more than 9 million shares trading hands by early afternoon.
It helps that analysts have been sounding a little more upbeat about the stock in recent days. On Thursday, National Bank's Kris Thompson raised his target price on the stock to $15 (U.S.) from $12, while maintaining an "outperform" recommendation.
On Tuesday, Peter Misek at Jefferies & Co. doubled his price target on RIM to $10 and raised his recommendation to "hold" from "underperform."
In either case, the renewed enthusiasm comes as RIM readies the launch of its new operating platform, BB10, for its next generation of BlackBerry devices in the New Year. The system had been delayed a number of times, raising concerns that the company would die before ever releasing it.
Now, not only is BB10 on the launchpad, but the buzz is positive. Mr. Thompson believes it will drive shipments to 35.5 million units in fiscal 2014, up from an earlier estimate of 31.6 million. And it should lift the BlackBerry's market share to 4.5 per cent from 4 per cent.
"The shipments boost reflects about one more month of BB10 product availability plus a little extra for the positive sentiment building in the industry from our discussions," he said in his note.
Douglas Pollitt, at Pollitt & Co., argued in mid-July – when RIM shares traded at just $7 (Canadian) – that views on the stock seemed excessively negative. He liked the fact that BB10 was based on the QNX operating system, a programmer's dream and one that will likely distinguish BlackBerry devices from the competition, in a good way.
"All it takes is for one or two good things to happen and the outlook can change quite quickly," he said in a research note. "We think there is a reasonable likelihood that BB10 will trigger such a change in outlook."
Since then, Mr. Pollitt has had access to the BB10 after enrolling in the developer program, for the purpose of writing applications, giving him a far closer look at what's arriving in the New Year. He remains a fan: "The development framework is intuitive and accessible yet at the same time very powerful," he said via email.
But you also have to wonder if RIM's rebound is also part of a reappraisal of Apple. Over the same period that RIM's share price has nearly doubled, Apple's share price has slumped about 20 per cent.
Coincidence? Apple's latest iPhone and iPad models have been well-received – but you get the sense that the company is no longer seen as infallible. Those latest gadgets showed incremental improvements rather than revolutionary changes designed to keep Apple well in front of the competition.
As well, there were two high-profile executive dismissals that suggested some management tension – marking a potential shift from the way Steve Jobs, who died in 2011, used to run the company.
Still, RIM's rally comes with at least one caveat: The rebound only looks good because of how low the share price had fallen by mid-September, amid customer defections and dwindling market share. Even with the recent gains, the price remains more than 92 per cent below its 2008 high – meaning that this is still one beaten-up stock.
David Berman