What is Research In Motion (RIMM) Worth?
After the recent volatility in Research in Motion (NASDAQ: RIMM) one wonders how to trade the stock. After being as low as $36/share in March and as high as $86/share just this month, the stock now is selling for $67/share after a disappointing earnings report was released last Thursday.
Although results were impressive in the face of the recession (especially compared with other industries) they fell short of expectations and the stock was sent swooning. RIMM did report a YOY 20% increase in profits (after adjusting for one time charges) and a 37% increase in revenues.
Assuming uneven income growth for the next 5 years of between 8-10% and then a gradual slowing to 3% annual growth starting in 2020, $70/share seems like a fair price. Back out cash and short term investments and you could bump that target several dollars higher.
In short if you believe the economy is on the mend and in Research in Motion’s products, anything below $70/share could be a buying opportunity.
