The Research In Motion Limited (NASDAQ:RIMM) stock has been on an uptrend this year and in recent weeks has also been upgraded while the target price has been raised. There is a generally upbeat sentiment about the company with the imminent launch of its new Blackberry 10 operating platform which is receiving initial good response.
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A couple of brokers have also put the top-end value of the Canadian handset maker's shares at $17 each.
Todd Coupland of CIBC upgraded RIM to a “sector Outperform” rating, or the equivalent of a buy. He also bumped his price target on the stock to $17 from $8 – making it the highest price target on RIM among Wall Street analysts, according to data from Thomson Reuters.
“With a January 30 BB10 launch date locked in, along with carrier and developer feedback now more clear, an upgrade of the existing subscriber base will be the most likely outcome,” he wrote. “Even in the face of lower services ARPU (we assume -6% in F2014), RIM looks materially undervalued.”
According to Coupland, the demand for its new platform is mostly expected to come from its customers who are expected to upgrade and he has estimated shipments of 41.4 million units of Blackberry handsets in fiscal 2014.
Then there is Steven Li of Raymond who has kept a Neutral rating on the shares. According to him RIM might find it difficult to compete with Apple's iOS and Google's Android - especially the latter which offers a free ecosystem.
Li feels that the new operating system might make the company more attractive as a potential acquisition target. He assigns a valuation range of $7-$17 for the stock, “with the variability based largely on whether we give RIM credit for ‘milking’ the services cash flow in liquidation.
Shares of RIMM continued to trade higher in Monday’s session and rose 2.74%. The stock has gained about 40% since last Monday on multiple upgrades.