It seems to be getting harder to find supporters of Research In Motion Ltd. in the analyst community. RIM today was stung with yet another downgrade, this time from the Toronto-based investment bank Northern Securities Inc.
Analyst Sameet Kanade warns things will only get worse before they get better for RIM, and lowered his rating to “sell” from “hold.”
Mr. Kanade also cut his target to $4.50 (U.S.) from $6.00, which is one of the lowest price targets on the Street. The average target is $7.40, according to Bloomberg data. There are 28 analysts with hold ratings on RIM and 20 with a sell. Only one has a buy.
“Over the past month, we have assessed the likelihood of a potential bid for RIM and believe the potential remains remote at this time,” he said in a research note. “Additionally, we do not expect any licensing opportunities before the launch of the BB10 devices nor do we expect RIM to open its platform to other operating systems such as Android. Resultantly, we believe investors should evaluate the investment potential for RIM based purely on fundamentals, which we believe will continue to decline over the next four quarters at least.”
RIM is expected to release its fiscal 2013 second-quarter results on Sept. 27. Mr. Kanade expects them to be non-events, as the company is focused on launching the BlackBerry 10 devices in the first quarter of calendar year 2013.
New smartphone sales numbers from research firm IDC today have further illustrated RIM’s challenges. It found the BlackBerry lagging far behind Android and Apple devices in global second-quarter sales. Combined, Android and Apple had 85 per cent of the worldwide market in the quarter. BlackBerry devices, meanwhile, came a distant third with 4.8 per cent of the market, compared to 11.5 per cent a year earlier.
RBC Dominion Securities is warning investors to think twice before accumulating shares in semiconductor companies, downgrading the entire sector to “market weight” from “overweight.”
The action resulted in RBC also lowering its ratings on Intel, Nvidia, Texas Instruments and Analog Devices to “sector perform” from “outperform.”
It cited several areas of concern. There’s been a reluctance across the majority of distributors and end-market customers to build inventories through a still shaky macroeconomic environment. In addition, PC orders aren’t improving, and he cited the lack of growth in communications equipment semiconductors, especially given the European and Chinese economic slowdown.
“Order rates are beginning to decelerate across multiple end-markets as macro concerns continue to weigh on the overall mood, while a lack of inventory investment could pose near-term revenue risks,” RBC analyst Doug Freedman said in a report.
Downside: RBC cut its price target on Intel to $24 (U.S.) from $28; on Nvidia to $15 from $20; on Texas Instruments to $28 from $32; and on Analog Devices to $41 from $45.
Euro Pacific Canada analyst Luisa Moreno has initiated coverage on Orbite Aluminae Inc., which has developed a unique technology to produce alumina from clays, with a “buy” rating. She believes the company will be able to start up a full-scale smelter-grade alumina plant by 2015 that will also produce significant byproducts. “If the process viability is proven, we expect to see an increased interest in the Orbite process as the need for new alumina refineries arises,” she said.
Upside: Ms. Moreno set a 12-month price target of $8.
Goldgroup Mining Inc. has deferred the environmental impact assessment for its Caballo Blanco project in Mexico after the federal election resulted in personnel changes in the department overseeing mining legislation. “We believe this has pushed the permitting process for the Caballo Blanco project out by another four to six months, with start-up now likely in mid-2014.” said Stonecap Securities analyst Christos Doulis. “We believe the shares will remain under pressure until there is clarity on the permitting process and timeline.”
Upside: Stonecap cut its price target to 85 cents from $1.05.
UBS expects mining capital expenditures to decrease by 15 per cent through 2015, starting with a decline of 4 per cent this year, due to weaker global GDP growth, especially in China. That’s bad news for Finning International Inc., which derives 36 per cent of new equipment sales from the mining sector, notes UBS analyst Hilda Maraachlian.
Upside: Ms. Maraachlian cut her price target by $4 to $34 but reiterated a “buy” rating.