Desjardins Securities has initiated coverage of Research in Motion Ltd. with a â€œbuy-above-average riskâ€ rating and a 12-month price target of $105 (U.S.) and $121 (Canadian) a share. RIM closed Tuesday at $77.10 (U.S.) on the Nasdaq Stock Exchange and at $87.93 (Canadian) on the Toronto Stock Exchange. Analyst Paul Howbold outlined in his report a number of reasons why he believes RIM’s rapid growth will continue. For one thing, â€œthe mobile corporate e-mail market remains largely unpenetrated,â€ with penetration rates in the low single digits, he said. He expects that to rise sharply.
Also, â€œRIM remains the leading supplier to the enterprise market thanks to its integrated offering,â€ Mr. Howbold said. Furthermore, â€œwe believe that the replacement cycle, and its ongoing stream of hardware revenues, remains one of RIM’s key revenue opportunities,â€ he said.
â€œIn particular, the strong initial success of models such as the 8700 suggests that the replacement cycle could be reduced further from the current 2Â½years,â€ Mr. Howbold said. And that shorter replacement cycle, together with a larger customer base, means accelerating device sales.