Market analysts from J.P. Morgan upgraded RIM’s stock to overweight from neutral this morning, citing a stock cost 21.7 times its 2007 pro forma earnings estimate of $2.98. According to J.P. Morgan, that’s roughly a 10% discount to the valuation afforded to comparable companies’ shares. The brokerage also expects RIM’s earnings to post a compound average growth rate of 29% through 2009, while revenue should rise by 19.9% and their subscriber count should double to more than 10 million over the next 18 months.
“Arguably, the decline in RIM’s multiple makes sense in the context of the firm’s seven consecutive quarters of declining y/y revenue growth, recent downward revisions to guidance, and recurring litigation overhangs,” J.P. Morgan said. “However, we expect revenue growth to re-accelerate in the fiscal fourth quarter of 2007 and we believe management has set expectations to more reasonable levels heading into FY07. The litigation threat remains.”
A quick look at RIM’s pre-market trading today shows them up 2 USD from yesterday’s closing price of 64.80 USD.