Analyst Says BlackBerry May Avoid ‘Worst-Case Scenario’

Research In Motion Ltd. climbed as much as 4.7 percent after Jefferies & Co. raised the stock’s rating to hold, saying the struggling maker of the BlackBerry may avoid a “worst-case scenario.”

RIM’s new BlackBerry 10 phones, due to be unveiled on Jan. 30, now have a 20 percent to 30 percent probability of success, said Peter Misek, a Jefferies analyst in New York. Misek, who had previously rated RIM the equivalent of a sell, also increased his target price to $10 from $5.

After years of losing ground to Apple Inc.’s iPhone and Google Inc.’s Android, RIM is counting on the BlackBerry 10 smartphones to resurrect its fortunes. While the BB10 operating system is still more likely to fail than not, it has won the support of wireless carriers, improving its prospects, Misek said in today’s report.

“We have been surprised by the strongly positive initial feedback on BB10 from carriers,” he said. “We expected a more muted response, given BB10 is two years late and RIM’s market share has plunged from 20 percent to 5 percent. Our theory is that carriers see BB10 as one of their last chances to avoid being locked into a long-term smartphone OS duopoly.”

RIM shares rose 1.2 percent to $9.71 at the close in New York. The shares, down 33 percent this year, traded as high as $10.04 earlier in the session.

The rosier outlook follows a prediction from Pacific Crest Securities analyst earlier this month that the BlackBerry 10 would be dead on arrival.

“We believe BB10 is likely to be DOA,” James Faucette, a Pacific Crest analyst in Portland, Oregon, said in a report. “We expect the new OS to be met with a lukewarm response at best and ultimately likely to fail.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE