Lately, Research In Motion has been getting very positive reports from analysts. The most notorious RIM bear, Peter Misek, has even been relatively positive.
RIM will announce their FQ3 results on Thursday, December 20th, 2o12. CIBC analysts expect Q3 sales of $2.9B (consensus is $2.7B), shipments of 7MM (down 5% Q/Q, -50% Y/Y), service revenue of $1.05B, gross margins of 33.1% (consensus is at 28.1%), and adjusted EPS of -$0.29 (consensus predicts -$0.36). They forecast break even cash flow.
CIBC expects a portion of users will be holding off for BB10 phones, which are expected to hurt shipments slightly. This is why they believe their forecast of 7MM phones shipped (-5% Q/Q versus +22% Q/Q average last five years, down 50% Y/Y versus +56% average last five years) is a reasonable and conservative figure.
RIM should have a price target of $17, says CIBC. The $17 price target is based on 15x F2014E EPS of $0.85 plus cash per share of $4.47. Peers trade at 11.4x 2013E EPS estimates. for the Canadian based company. CIBC believes that if RIM can remain fairly steady in the U.S. (4% to 5% market share) and keep interest in key markets alive, multiple expansion will occur with expectations still far too low.
Lastly, CIBC says not not wait and investors should buy shares now. However, the CIBC does possible risks: A failure of BB10 to increase aggregate subscribers would pose a material problem for the company, brand and their price target. Will you be buying RIMM shares today?