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Canaccord, citing soft sales, slashes price target on RIM

Research In Motion Ltd. has been taking a drubbing from analysts since its earnings warning in late April (Last Thursday, National Bank downgraded the stock for the second time in a week).

This week is no different.

Canaccord Genuity, which conducts regular checks into store sales of RIM products in the U.S. and internationally, has significantly dropped its price target for the Canadian technology giant after finding continued market share losses in April in the high-end North America smartphone market - and a softening in sales overseas.

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"Our North American channel checks indicated soft BlackBerry sales and high-end share losses to the iPhone and Android smartphones at AT&T, Verizon, Sprint and T-Mobile," Canaccord analyst T. Michael Walkley wrote in a note today.

"Further, our global checks indicated slowing Torch sales versus ramping Android sales in Western Europe, and slowing global Curve 8520 sales versus both low-end Android smartphones and aggressively priced Nokia" products.

RIM's new 7.0 smartphones should help boost sales as consumers upgrade their devices. But Mr. Walkley believes they will hit the market this summer a couple months behind his earlier expectations and the new product won't significantly stem consumer share losses to iPhone and Android smartphones. Meanwhile, the Playbook tablet is only seeing "modest" initial sales.

"We anticipate a challenging 2011 for RIM," he said.

Downside: Mr. Walkley lowered his price target by $12 to $49 (U.S.) and maintained a "hold" rating.

Valuations for Kinross Gold Corp. shares are favourable and "an entry at these levels is a reasonable investment decision for long-term holders," contended CIBC World Markets Inc. analyst Barry Cooper. He cautioned, however, that it could be several quarters before the stock begins to outperform its peers given the projects that are in the pipeline.

Downside: Mr. Cooper lowered his price target by $2 (U.S.) to $20 and reiterated his "sector performer" rating.

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Related: Kinross CEO tackles stock price head-on

IGM Financial Inc. reported better-than-expected first-quarter results, with mutual fund sales showing improvement. Healthier industry fundamentals, an attractive valuation and a 4.3 per cent dividend yield should help support the stock going forward, said TD Newcrest analyst Doug Young.

Upside: Mr. Young hiked his price target by $5 to $55 and affirmed his "buy" rating.

Related: Mutual fund industry given some hope

Vale SA reported adjusted earnings per share below consensus and iron ore and pellet production and sales were disappointing, albeit at better-than-forecast margins, noted Canaccord Genuity analyst Gary Lampard. Vale also disclosed a number of project delays.

Downside: Mr. Lampard cut his price target by $1 to $43 (U.S.) while reiterating a "buy" rating.

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Royal Host Inc. has appointed John Carnella as its new president and CEO, marking a possible turning point for the stock, according to TD Newcrest analyst Sam Damiani. Mr. Carnella has acted as a consultant to Royal Host over the past several months and brings significant hotel industry experience. "We believe he will focus his efforts on fixing the company's balance sheet, allocating capital and perhaps pruning some assets," Mr. Damiani said.

Upside: TD Newcrest upgraded the stock to "hold" from "reduce" and raised his price target by 25 cents to $1.50.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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