J.P. Morgan analyst Ehud Gelbaum raised his estimates and price target on Research In Motion (RIMM), while maintaining his Neutral rating on the stock.
Gelbaum, boosted his EPS estimate for the February 2010 fiscal year to $4.06 from $3.71; for FY 2011 his estimate is unchanged at $4.64. For the May quarter, his new estimate is 96 cents, up from 88 cents. His price target on the share is now $88, up from $74. The stock closed yesterday at $83.45.
Gelbaum writes in a research note that the higher EPS estimates reflects an upward revision in his expectations for both gross margins and devices sold for the latest quarter. His forecast on units shipped for the May quarter rises to 7.9 million from 7.7 million, "reflecting the ultra-lean channel inventories entering the quarter and the overall decent handset trends in Q2."
He also says the company could raise FY 2010 gross margin guidance from low 40s to the same 43%-44% range they forecast for Q1, given that "none of RIMM's soon-to-be-launched phones this year contain margin busting new components," unlike FY 2009 when the touch-screen Storm was introduced.
Friday, June 12, 2009
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