CIBC upgrades RIM by two notches, more than doubles price target

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Inside the Market's roundup of some of today's key analyst actions

CIBC World Markets analyst Todd Coupland has become the latest analyst to recommend investors snap up shares of Research In Motion Ltd. before the BlackBerry 10 launch on Jan 30, upgrading the company today by two notches to "sector outperformer-speculative."

Mr. Coupland, who previously rated RIM "sector underperformer," also more than doubled his price target, from $8 to $17 (U.S.). He calls the stock "materially undervalued."

"We believe the early reviews of BB10 devices are strong enough to keep and grow the current subscriber base," Mr. Coupland said in a research note. "It is also our view that the recent increase in share price still does not value an increase in RIM shipments or subscribers. We believe investors should buy the shares at these levels, prior to the BB10 launch."

Details of the BlackBerry 10 devices have been slowly revealed in recent days. With features such as one-thumb navigation, at least 100,000 apps and an improved speedy browser, industry and press feedback has generally been positive.

Mr. Coupland admitted that it's still an open question whether RIM can win back material market share with the new devices. But regardless, "it is our view that RIM is now in a good position to successfully stabilize its base, which will help repair its brand reputation and push shipments higher on a year/year basis off a low base," he said. "The expanding global smartphone market will also help and these factors we believe will lead to positive earnings per share in fiscal 2013."

He predicts that RIM's enterprise customers, as well as its largely no-contract international consumer base, will want to upgrade their phones. He forecasts 41.4 million shipments in fiscal 2014, up from 30.2 million in fiscal 2013. That's still short of the 49 million in smartphones RIM shipped in fiscal 2012.

Shares in RIM surged last week after National Bank Financial analyst Kris Thompson hiked his price target on the stock to $15 from $12 (U.S.). That followed a move earlier in the week by analyst Peter Misek of Jefferies & Co., who doubled his target to $10.

RIM shares are up about 2 per cent at $11.66 (U.S.) in the premarket.

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Sprott Power Corp.'s purchase of Shear Wind appears to be attractively priced and "has the potential to drive substantial dividend increases," says Canaccord Genuity analyst Jared Alexander.

"We believe the transaction will lead to an improving payout ratio and the ability to increase the dividend materially through 2015," Mr. Alexander wrote in a research note. The acquisition expands Sprott Power's fully contracted operating capacity by 51 per cent, he said.

Upside: Mr. Alexander raised his price target to $1.45 from $1.30 and rates the stock "buy."

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Recent drilling at Richmont Mines Inc.'s Island Gold mine suggests "good potential" for resource expansion and production growth, said Desjardins Securities analyst Brian Christie.

"We view this new discovery as a potential game changer for Richmont," Mr. Christie wrote in a note.

Upside: Mr. Christie raised his target to $6.75 from $5.75 and his rating on the stock to "buy" from "hold."

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Goldman Sachs has added Yahoo Inc. to its "conviction buy" list, its highest rating for a stock. Analyst Heath Terry is encouraged by the company's share buyback program - it has repurchased 54.4 million shares year to date and plans to do more-- and suggested the value of its balance sheet and core business "are worth more than the current stock price."

This capital allocation, along with recent clarity on the Internet giant's turnaround and checks that signal effective management of the organization's structure, investments and finances, "creates a very attractive risk/reward scenario"

Upside: Mr. Terry raised his price target by $2 to $24 (U.S.).

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Citigroup has reinstated coverage of Apple Inc. with a "buy" rating, expecting shares to recover from their recent fall. Citigroup analysts said the correction is consistent with previous ones for Apple and other firms that account for 4 per cent of the S&P 500 index on their own. Apple is now so large that sales growth will inevitably decline, especially as the iPhone faces competitive threats from cheaper smartphones, they said.

Upside: Citigroup set a target of $675 (U.S.).

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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities