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RIM office in Waterloo, Ont. (Peter Power/Peter Power/The Globe and Mail)
RIM office in Waterloo, Ont. (Peter Power/Peter Power/The Globe and Mail)

Eye on Equities

Canaccord cuts estimates on RIM Add to ...

Canaccord Genuity analyst T. Michael Walkley has more discouraging words for those betting on a turnaround at Research In Motion Ltd. . Despite the company’s increased marketing efforts, his store checks in January indicated continued weak sales for the new BlackBerry 7 smartphones.

“With very strong share gains for the iPhone 4S, increasingly price competitive Android smartphones, improving Windows smartphones, and strong sales of the affordable 7-inch Amazon Kindle Fire tablet, we anticipate increasing competition across all tiers of RIM’s products in (calendar year) 2012,” he wrote in a research note today.

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He believes BlackBerry 7 products will continue to struggle until BlackBerry 10 products launch in late 2012 and lowered his BlackBerry sales estimates for the year.

This translated into more modest earnings forecasts for both fiscal 2012 and 2013. He now expects fiscal 2012 earnings per share of $3.37 (down from $3.48) and 2013 EPS of $2.10 (from $2.50).

“By the time BB 10 OS smartphones launch, we estimate BlackBerry smartphone share could decline to 6 per cent of the smartphone market, resulting in a small base for RIM to try and create a long-term competitive ecosystem for its new OS,” he said.

And building from that small base is going to be difficult. “Our checks indicate consumers in high-tier smartphone markets prefer the robust ecosystems and high-end hardware of the iPhone and Android smartphones to BlackBerry devices,” he said.

Indeed, Mr. Walkley had much more positive things to say about Apple Inc. , a stock marching today to fresh all-time highs. As our David Berman earlier wrote, he further raised his price target on Apple to $665 (U.S.), as those same store checks indicated very strong sales trends of the iPhone 4S at all three U.S. carriers, as well as in international markets.

Downside: Mr. Walkley reiterated his “hold” rating and $15 (U.S.) price target.

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Elevated cotton costs pressured margins at Gildan Activewear Inc. in its latest quarter and significant inventory drawdowns at wholesalers severely hurt unit shipments. But CIBC World Markets Inc. analyst Mark Petrie believes these challenges - while persisting into the current quarter - are largely near-term pressures that will ease as cotton costs decrease and industry volumes continue to stabilize.

Upside: Mr. Petrie raised his price target by $2 to $28 (U.S.) and maintained a “sector outperformer” rating.

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The uranium market should “build steady momentum” this year thanks to demand growth from developing nations, commented CIBC World Markets Inc. analyst Ian Parkinson. This growth, however, will be slightly weaker than Mr. Parkinson had earlier forecast, and in some Western countries, demand has become stagnant. He believes a significant rebound in the sector is looming - but it may have to wait until the longer term.

Downside: Mr. Parkinson trimmed his price targets on several uranium stocks, including Cameco Corp. , which he now predicts will reach $39 (Canadian) (from $42).

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Agrium Inc. reported fourth-quarter earnings well beyond the expectations of Canaccord Genuity analyst Keith Carpenter, and he believes the grain market will remain supportive for the fertilizer producer heading into the spring season. Demand is sluggish in wholesale channels, but that may be because lower grain prices are prompting buyers to delay fertilizer purchases until later in the year.

Upside: Mr. Carpenter raised his price target by $6 to $99 (U.S.).

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UBS analyst Hilda Maraachlian is encouraged by prospects for growth at aviation simulator CAE Inc. . “Increased aircraft backlog, growth in air travel as well as re-fleeting of legacy carriers continue to drive demand for commercial aircraft and aviation training solutions,” she said. “Further, despite procurement delays CAE management remains cautiously optimistic with respect to the outlook for military demand given CAE’s exposure to growing demand in the emerging markets and strategic positioning on platforms that have proven largely resilient to defence budget cuts.”

Upside: Ms. Maraachlian raised her price target by 75 cents to $14.75 and maintained a “buy” rating.

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