Kevin Dede, analyst with New York-based equity research firm Brigantine Advisors, made quite clear he isn't a fan of Research In Motion Ltd. as he initiated coverage on the company today.
Despite having lost more than half their value over the past few months, he slapped a "sell" rating on RIM shares, while assigning a $20 (U.S.) price target. That's among the most bearish on the Street; estimates range between $18 to $90 with a median target of $33 (U.S.), according to Capital IQ.
"Design compromises, an attenuating reputation, and product introduction delays plague RIM's BlackBerry market position and generate cause for concern; worse, the severity of the trend may not be fully recognized for the next few quarters," Mr. Dede said in a note.
He thinks sales may fall further and earnings estimates could continue to deteriorate. Things may improve once devices running its QNX operating system enter the market, he conceded, but that may be several quarters away. RIM has said it plans to introduce QNX phones in "early" 2012.
Mr. Dede reviewed several recent surveys and sales reports - ranging from Gartner and Comscore to RIM's own publicly disclosed figures - and concluded there's "indisputable and overwhelming evidence" that RIM is losing the battle for the hearts of smart-phone loving consumers. "Across a great number of surveys of smart phone sales and operating system market share, the clear conclusion indicates RIM continues to lose, both in past purchases and in consumers' future preferences," he said.
"At this juncture, we believe RIM is positioned to suffer an Apple-and-Android-driven, Nokia-like demise at least until the company's QNX-based handsets can prove to bring greater consumer interest."
RIM can still participate in the growth of smart phones internationally, but for investors to really take a liking to the stock, there must be improved performance in the leading markets of North America and Europe, he contended.
"Discontent appears clearly factored into the current valuation, but continued loss of share and stymied growth could continue to drive investors away. The longer-term outcome, we believe, depends entirely on RIM's ability to deliver products consumers want. The possibility becomes less likely as competitive ecosystems driven by Google and Apple continue forward."
One bright spot Mr. Dede points out is the company's strong balance sheet, with $2.9-billion in cash and no debt. That should mean RIM, similar to Nokia, can continue operations indefinitely, rather than - as Palm did to HP - fall prey to a takeover.
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CIBC World Markets Inc. analyst Robert Sedran is taking a modestly more favourable view of Bank of Montreal after the company reported better-than-expected third-quarter earnings. Even though its Marshall & Ilsley Corp. acquisition was only on the books for 26 days before the quarter ended, it significantly contributed to U.S. profits, a noteworthy development as performance of the asset will be a big determinant of share performance relative to peers over the next couple of years, he said.
Upside: Mr. Sedran, who rates BMO as a "sector performer," raised his price target by $1 to $65 (Canadian).
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Scorpio Mining Corp. , a silver-lead-zinc-copper producer in Mexico, has "huge expansion potential and plenty of exploration sizzle," said Clarus Securities Inc. analyst Mike Bandrowski. "With over 20 years of Canadian underground mining experience, newly appointed CEO and president Parviz Farsangi is focused on an aggressive expansion plan that could see Scorpio nearly quadrupling its silver equivalent production within the next 24 to 36 months," he said.
Upside: Mr. Bandrowski initiated coverage with a "buy" recommendation and $3.50 price target.
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QHR Technologies Inc. "offers excellent growth at a reasonable valuation, even factoring in a small-cap, low-liquidity discount," argued Versant Partners analyst Tom Liston. He notes that QHR will be the largest electronic medical records software provider in Canada once its acquisition of Healthscreen closes, and believes the company will continue to consolidate that market.
Upside: Mr. Liston maintained a "buy" recommendation and $1.30 price target.
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Fire River Gold Corp. has released more high- grade drilling results at its Nixon Fork gold mine in Alaska, with about 17 per cent of 99 holes appearing economic, noted Loewen, Ondaatje McCutcheon Ltd. analyst Michael Fowler. "The successful drilling results to-date continues to improve our confidence in Fire River's understanding of the ore body to support near-term production," he said.
Upside: Mr. Fowler rtes the stock as a "speculative buy" with a $1.40 price target.
Darcy Keith