“Things Can’t Get Worse In The Foreseeable Future” For RIM, Says Semi-Optimistic Analyst

jim balsillie
RIM co-CEO Jim Balsillie

[credit provider=”AP”]

More (sort of) good news for Research In Motion from Wall Street.Sanford Bernstein analyst Pierre Ferragu has a note out this morning titled, “Things Can’t Get Worse In The Foreseeable Future,” in which he upgrades the stock to “market perform.”

He doesn’t think RIMM is in good shape. He doesn’t think it’s a buy.

He just thinks it’s not as screwed as everyone else says.

He says shorts should cover their positions because the stock has tanked 39% since February, making it “cheap on any metric.” (He says the stock is trading at 4.7x management guidance, and 5.5x sell side guidance for financial year 2012 EPS. It’s also cheap on other measures like 2012 ex-cash earnings and 2012 sales.)

Another reason to get out of a short: The disdain for RIM is baked in. The company’s situation will not get so much worse in the next 12 months that the market will get even more negative causing the stock to tank further.

And that’s about all he has to say in favour of RIM.

He says its executives are “in denial of challenges facing the company.” And here are his four reasons RIM is in big trouble:

  • It’s a “broken brand”. Market surveys show consumers are ditching BlackBerrys. The amount RIM is getting per phone has been sliding for the last year.
  • RIM’s power in the enterprise is weakening, and under attack. Many companies are testing out iPhones.
  • RIM missed the boat on innovation. RIM’s original killer app was email. That is now a commodity. It has done nothing to make itself stand out beyond email.
  • The emerging markets have helped RIM to date, but that won’t last. As Android and iPhone enter more markets, they will clobber RIM just like they did in North America an Europe.