I’ve been pretty bad at posting new blogs although I have been thinking about material to write. I just haven’t brought myself to doing so until now because once again, an analyst has really confused the outlook on Research in Motion (RIM). I’m very glad that this analyst isn’t from RBC Capital Markets this time. I don’t like to pick on just one institution.
Yesterday, 2 analysts downgraded RIM and the stock went down about 2%. No big deal. What was confusing was that the analyst from brokerage firm CLSA(a division of of Credit Agricole Securities) downgraded the stock 2 notches to underperform BUT at the same time raised the price target from $65 to $68. The stock was trading at about $63 prior to the analyst downgrades. If investors were to hold this stock, and the analyst was correct in his price target, then investors should be able to sell for around $68 in the future which is almost a 10% gain from where it was at. I’d be happy with 10%, wouldn’t you? In fact, I purchased shares today because I’ve been waiting to get back into RIM. I’ve been in and out of Research In Motion several times now. There was a huge rally when the Playbook demo came out a month ago.
So why is the analyst basically saying that it’s worth $68, instead of $65 but you should get out now even though it’s selling at $63? Analysts like these need to be subjected to some kind of discipline for being confusing and retarded at the same time. It would have made so much more sense if it was just downgraded to neutral or if he lowered his price target to below $63 but who knows what the motivations this analyst had, maybe he just wanted to be on CNBC or maybe he was shorting RIM?