Goldman Sachs's Simona Jankowski reiterates a Buy rating on RIM shares, and a $19 price target, urging investors to "use the recent 'sell the news' pullback to add to positions."
We continue to see significant upside to estimates over the next three quarters, as BB10 devices drive upside to the Street's ASP and margin forecasts. With 110 carriers completing lab testing by February, 50 carriers offering integrated billing, and Verizon getting an exclusive for the white Z10, we continue to see strong carrier support for BB10. Consumer adoption will decide the ultimate outcome, but estimate revisions should be a positive catalyst in the meantime.
Jankowski does the math on what the U.K. retail debut of the Z10 today, and the February 5th Canadian debut:
Using Gartner data, we estimate that the UK and Canadian markets represented about 15% of BlackBerry's quarterly device shipments, or approximately 2mn units. Assuming that the company has 1 month of devices sales and captures 20% market share within the two regions (slightly above its max market share of 17% in 3QCY11), we estimate BlackBerry could sell roughly 1mn BB10 devices in its February quarter. This does not count the UAE, other regions, or potential inventory sell-in in the US market, which could provide further upside.
Jankowski thinks application support for the platform is "off to a good start:
BlackBerry delivered on its promise that its BlackBerry World apps store would have 70,000 apps. It also highlighted support from several marquee apps, including Facebook, Twitter, LinkedIn, Foursquare, Skype, Amazon Kindle, Angry Birds, and others, as well as support for music and video. Over half of the 70k apps have native support.
Jankowski ticks off some of the novel features that caught her attention at yesterday's debut:
Consistent with BB10s browser superior performance on industry benchmarks – the Ringmark and HTML 5 tests – our preliminary tests show it to be much faster than leading competitive offerings. Additionally, while the company provided a full demo of the BB10 OS, we believe the details around Hub, Flow, Peek, and Balance were largely known. BlackBerry believes its Keyboard functionality will be a key differentiator, with the capability to 'flick' entire words to the screen with a single thumb. It can also recognize multiple languages within a single text or email.
In what we viewed as one of the most differentiating new features that had not yet been leaked, the company introduced BBM (BB Messenger) video call capability, which allows a user to share a camera and screen, sharing documents, screen shots, powerpoints, etc. during a video call. Additionally, newly announced BB Remember is an application that can save websites, photos, or other data and separate it into folders, providing a single source point for various projects, themes, or topics.
Also newly announced BB Story Maker allows a user to compile music, titles, credits, video, or photos into a sequence or slideshow and then share with other users. BlackBerry also demoed the Camera functionality, which includes user operated focus and touch-anywhere picture taking. It also incorporates Time Shift (the ability to adjust faces/objects within a photo immediately after it is taken) and Picture Editor (background formatting, cropping, etc). TimeShift was previously known, but is another key innovation that differentiates BB10 from others.
Jankowski has an $11 sum-of-the-parts, a 70% probability assigned to her "fundamental valuation of $17 and a 30% probability for her "bull case," and a 15% probability for a $29 take-out value.
Update: CIBC's Todd Coupland, who rates RIMM shares "Sector Outperformer," also had positive things to say following yesterday's event, where the company "put on glitz, glamour and yes a little bling [...] The bling of course is Alicia Keys, named Blackberry Creative Director, who plans to be in the office at least for a while."
"It was a "slick" show which is table steaks in the maturing and more competitive smart phone market."
Notes Coupland, "- In Canada 50% of pre-registration at the carriers are not currently BlackBerry users. This was a surprise and a data point that will be watched closely in other regions."
Coupland argues investors should at least hold the stock through March's fiscal Q4 report:
We remind investors of our core assumptions for an S-SO rating and positive EPS in F2014. Our view is that RIM is in a good position to successfully stabilize its base and benefit from upgrades and market growth that should push shipments higher Y/Y off a low base. The shares should be held or bought through the Q4 report.
"Couple of "tells" for you.
Apple stock doing NOTHING since launch yesterday.
Qualcomm stock – HUGE numbers – sold a lot of Snapdragon processors to BBRY for BB10 launch.
It's all good at the new BBRY. ENTER BB10"
"Here in Southern California, our market is huge and young people especially (18-35 yrs) are over the iPhone craze. Sorry to burst your bubble "i" lovers but it's true. BBRY will see success!"
"Apple and Android can't duplicate BB10 new features. Their OS potential is maxed out. BB10 technology potential is endless."
"I think most people are missing the point that BlackBerry isn't just about a smartphone anymore. The operating system running on the phone built from QNX is way ahead of IOS or Android. It is used for highly secured devices, in vehicles, and even in nuclear power plants. If they get through this, they have a long-term strategy for truly mobile computing."
Last edited by MCSL; 02-01-2013 at 11:21 PM.