Monday, May 9, 2011

Research In Motion Limited (NASDAQ: RIMM, TSE: RIM) Q3 2011 Price Target

Recent price: 46.12$
P/E Ratio: 7.24
3 Months Target Price: 55$

Company Description
According to Reuters. Research In Motion Limited (RIM) is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information, including e-mail, phone, short message service (SMS), Internet and intranet-based applications. RIM’s portfolio of products, services and embedded technologies are used by organizations worldwide and include the BlackBerry wireless solution, the RIM Wireless Handheld product line, software development tools and other software and hardware. Its subsidiaries include Research In Motion Corporation, Research In Motion UK Limited and RIM Finance, LLC.

Confidence Margins
Strong resistance $70.54 (+49%)
Light resistance $57.32 (+21%)
Light support $46.78 (-1%)
Strong support $42.53 (-9%)

Research in motion has been severely battered following the reporting of it's first quarter results. News on the conference call that the company was warning investors about profits and revenue for the full year of 2011 gave a good scare to investors. These events provide us with a great entry point in this very profitable company.

Entry strategy
For the cautious investor:
Buy the stock for 47$ or less.

For the risk-taking trader:
The September 2011 50$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 315$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 55$, or keep it until 70$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 55$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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