In a research note to clients upgrading the stock from "neutral", Goldman predicted previously-struggling RIM will beat the Street’s expectations over the next four quarters and return to profitability in fiscal 2014.
With that in mind, Goldman analyst Simona Jankowski placed a 12-month price target of $16 on RIM, up from $9 previously and representing an impressive 44% return from the company’s close at $11.08 on Wednesday.
Goldman isn’t banking on the highly-anticipated BlackBerry 10, due out on January 30, being a blockbuster device.
Instead, it sees just a 30% chance the new smartphone will succeed.
“Even if BB10 is ultimately not successful…we expect RIMM to outperform over the next 2-4 quarters, as we see upside to Street estimates from higher” application service provider revenue and inventory fill around the new product launch, Jankowski wrote.
Goldman predicted the BB10 will suffer a “lack of follow-through” on sales and subscriber adds “due to an inability to compete” with Google’s (GOOG) Android, Apple’s (AAPL) iPhone and now Microsoft’s (MSFT) Windows platform. RIM’s market share is seen falling to about 3% exiting fiscal 2014 from 4.4% in August.
On the other hand, “If RIMM does succeed in establishing BB10 as a viable niche ecosystem and sees follow-through demand post the launch...then it could further strengthen the long-term investment case,” Jankowski wrote.
The relatively optimistic Goldman note allowed RIM to continue its recent surge, which through Wednesday’s close left its shares up 76% from its September low of $6.31
RIM soared 8.12% to $11.99 in recent action, but remains off 17% year-to-date and and 31% over the past 12 months. The stock has also lost about 90% of its value since its 2008 all-time high.