It seems that investors of Research in Motion (RIM) and Nokia may have ample reason to stay optimistic as both the companies’ shares showed a marked rise this week. RIM’s stock shot up by nearly 14% on Friday, having already climbed 33% in the past week, while Nokia’s shares saw an 8% boost on Friday, following a 31% climb in share value over the last week. This brings some new questions to the forefront, the most pertinent being whether this sudden spike in share values will see a turnaround in the fortunes of both companies or if it is just an anomaly which will soon correct itself.
Ilkka Rauvola, analyst at Danske Bank Markets, recently reversed his previous recommendation to RIM investors from ‘sell’ to ‘buy’, while simultaneously doubling his price target on Nokia to $3.76 per share. This change of heart stems from the fact that Nokia’s Lumia 920 handsets are selling like hotcakes and the demand for the phone, running Microsoft’s Windows Phone 8 operating system, is increasing much faster than the supply. However, Rauvola is quite confident that Nokia will be capable of ramping up supply to meet the increasing demand but remains sceptical over the long term, pointing out that Nokia’s boom is just as likely to be short-term.
While it’s still uncertain whether Nokia’s new release will be a passing trend for customers with short attention spans or a rooted competitor in the smartphone market, RIM’s BlackBerry 10 OS received its vote of confidence from a local analyst at National Bank Financial, Montreal, who reiterated a ‘buy’ rating on the stock and lifted the target price from $12 to $15. The bank expects the sales of RIM’s new BlackBerry 10 to surpass the Street’s consensus estimates although there is floating scepticism amongst some reviewers who believe the new device is simply just hype and may disappoint a lot of investors if they’ve based their expectations solely the demos and promotional videos released by RIM.
While the fate of both stocks remain highly speculative, analysts have higher expectations from than RIM, but insist that it’s still too early to make any solid conclusions. The two companies have been greatly dwarfed by the successes of the two leading titans, Google and Apple, and it seems unlikely that either RIM or Nokia can fully recover their former glory in the market. In their favour, however, Apple’s drop in stock value is now being debated and this may open a window for, at least, Nokia to pull itself back up.
