Skip to main content

The Globe and Mail

RIM hits 9-year low amid signs of weak August sales

Research in Motion Ltd. BlackBerry smartphone handsets are pictured in this illustration picture taken on July 21, 2012.

Valentin Flauraud/Reuters

These are some of the key analyst actions on Bay Street today.

Research In Motion Ltd.
Things aren't getting much better for Research In Motion as the fall season unofficially gets underway. Its Canadian-listed shares inched to a fresh nine-year low today and Canaccord Genuity analyst T. Michael Walkley -- who's been particularly bearish on the stock for some time now -- released yet another troubling research report.

Canaccord's latest channel checks for August showed continued weak global selling trends for BlackBerry 7 smartphones. "While our checks indicated pockets of solid sales for RIM's low-end Curve 9550 and 9320 in markets such as Indonesia and the Middle East, RIM's higher-end Torch and Bold sales remain very weak," he said.

Story continues below advertisement

Mr. Walkley assigns a high probability to RIM releasing its BlackBerry 10 smartphone as scheduled in the first quarter of next year. But he doesn't see it doing much in terms of turning around the struggling business.

"In fact, we believe RIM has lost too much smartphone market share to Apple and Android and will mightily struggle to win back consumers even if BlackBerry 10 smartphones are very competitive and compelling products," he wrote.

"With increased global smartphone competition and our belief there is a very low probability the market will support RIM's new BB10 ecosystem, we believe RIM will ultimately need to sell the company or dramatically change its business model."

Downside: Mr. Walkley maintained a "hold" rating and an $8 (U.S.) price target, which matches the median analyst price target on the Street, according to Thomson/First Call.

_________

National Bank of Canada
Even though National Bank of Canada beat the Street consensus in reporting quarterly earnings per share last week of $1.98, CIBC World Markets analyst Robert Sedran isn't impressed. He downgraded the stock to "sector underperformer" from "sector performer," contending that the "quality of the beat" was weak.

Specifically, lending net interest income fell well short of expectations, as the company continued to chase greater quantity of loans at the expense of margins, he said. Net interest margins were down 20 basis points from last year, a trend he found "troubling."

Story continues below advertisement

He's also worried about the impact of the election campaign in Quebec, a province where the bank has considerable exposure. "While we suspect that fears may be overblown as they relate to the bank, they may remain an overhang on the shares if no clear mandate emerges from the vote," Mr. Sedran said.

Downside: Mr. Sedran cut his price target by $3 to $78.

_________

Medicis Pharmaceutical Corp.
While believing there is potential for Medicis to receive a higher bid than the $44-per-share cash offer from Valeant Pharmaceuticals International Inc., RBC Dominion Securities analyst Shibani Malhotra is advising investors not to bet on it. "With the stock now reflecting Valeant's offer, we no longer believe MRX shares represent a favourable risk/reward, leaving us neutral on the stock," she said.

Upside: Ms. Malhotra downgraded Medicis to "sector perform" from "outperform," and raised her price target by $7 to $44 (U.S.)

_________

Story continues below advertisement

Fairborne Energy Inc.
While Fairborne Energy has very little debt and there's significant potential to boost resources at its Harlech-area operations in Alberta, Raymond James analyst Kristopher Zack believes the stock will perform in-line with the market until it can demonstrate success with further well results.

Downside: Mr. Zack downgraded Fairborne to "market perform" from "outperform" and cut his price target to $1.65 from $2.50.

_________

Bonterra Energy Corp.
Bonterra Energy, a high dividend-paying exploration and production company focused in the Pembina Cardium play in Alberta, "represents a strong resource oil yield investment with solid asset exposure, capital efficiencies and returns to drive dividend growth," said National Bank Financial analyst Dan Payne. But he sees "near-term headwinds," commenting that it may need more funding or financing options to sustain production and dividend levels.

Upside: Mr. Payne initiated coverage with a "sector perform" rating and $44 price target.

For more analyst actions, breaking investing news and analysis, follow Darcy keith on Twitter at #eyeonequities

Report an error Licensing Options
About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Please note that our commenting partner Civil Comments is closing down. As such we will be implementing a new commenting partner in the coming weeks. As of December 20th, 2017 we will be shutting down commenting on all article pages across our site while we do the maintenance and updates. We understand that commenting is important to our audience and hope to have a technical solution in place January 2018.

Discussion loading… ✨