Analysts have been busily revising their target prices on Research In Motion Ltd. over the past week, stirring up opinions on the beaten up stock. What does it all mean? Not a whole lot, according to Chris Umiastowski – and as a former Bay Street analyst covering RIM, who now writes a blog, his insights have some weight.
First of all, he points out that target prices are almost pointless. “They usually indicate that an analyst is trying to play catch-up to what’s happening to the ticker tape,” he said. “How do you have a hold on a stock with a $28 target while it trades at $17? So when the target gets cut, all it means is that the analyst isn’t ready to change his view on the stock yet. So the target cut is not news. It’s an absence of news.”
The thing to pay attention to is the shift in analyst recommendations, which has also been occurring with RIM. Mr. Umioastowski argues that the shift, at least when it happens outside a shocking earnings announcement, often means that the analyst is making a call on a stock, which is more important.
Still, for all the changes among analysts (some of them positive), RIM shares continue to explore new lows, falling to $16.38 in New York on Wednesday.
For Mr. Umiastowski, who owns shares and continues to stand by the company, this reflects the view that investors don’t see any future for RIM. As for analysts: “The Street thinks RIM is worth more being sold to someone else (for a one time pop in the stock) or broken up (patents, etc) vs. being run by Jim and Mike. That’s unfortunate.”