Research In Motion Earnings Preview

Research in Motion [[RIMM]] is scheduled to report their fiscal second quarter 2010 results after the market closes on Thursday, September 24th. Based on our analysis, we at are expecting RIMM to report inline results that meet Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $3.64 billion and EPS of $1.02. This would represent a 41% increase in revenues from last year’s $2.58 billion in the same period. The current analyst consensus estimates calls for revenues of $3.62 billion and EPS of $1.00. On June 18, the company provided second quarter revenue guidance of $3.45 – $3.70 billion and $.94 – $1.03 EPS.


Research in Motion continues to post impressive top-line growth despite the macroeconomic headwinds that continue to prevail. Last quarter, RIMM posted 53% sales growth and we expect the company to be near the higher end of their guidance range this quarter. The improving sentiment, especially among their corporate enterprise customers, is likely to provide a lift to demand.


The company’s product portfolio continues to improve with the release earlier this year of the Storm and Curve 8900 phones. However, corporate spending has clearly been subdued over the last few quarters, but we expect that RIM will benefit as enterprise spending begins to ramp up once again. This improvement in corporate spending doesn’t appear to be accounted for in Wall Street’s estimates and so we believe it’s likely that consensus estimates will go up following RIMM earnings announcement.   


Stock Performance

Since the beginning of 2009, Research in Motion’s shares have gained an impressive 105% and have clearly outperformed even the 33% gain in the Nasdaq. Last year, RIMM’s stock fell a whopping 64% and underperformed the 41% drop in the Nasdaq.



Shares are now trading at 17x consensus 2011 EPS estimates. This is a discount to the relative valuations of their peer group. While RIMM stock has performed exceptionally well this year, we believe the shares still are attractively valued. The company continues to offer an impressive growth story and we expect the stock will return to triple digits.


Recommendation: Buy with a $100 price target.


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