SAN FRANCISCO (Dow Jones) -- Research In Motion may have done the impossible Friday: stealing some thunder from the megahyped iPhone.
Shares of Research In Motion shot up more than 20% in Friday trading to top the $200 mark briefly, setting a new all-time high for a stock that already had more than doubled in the last 12 months.
The action came after the company reported a 73% surge in earnings for its first fiscal quarter, handily beating Wall Street's estimates, thanks to strong demand for its line of mobile devices.
The results contrast sharply with those of rival Palm, which saw sales remain flat and earnings fall as the Treo maker spends heavily to refresh its product line.
RIM's results bolstered Wall Street's views of the stock. Five brokers upgraded the shares following the news. Now, 25 analysts rate the shares as the equivalent of buy, while eight remain neutral and only one carries a sell call on the shares, according to data from Thomson Financial.
The stock may not look as pricey after mid-August, when RIM plans to implement a 3-for-1 split, which the company also announced Thursday. In a conference call, Chief Executive Jim Balsillie said that the split was designed to make the share price "more accessible to investors."
Those remaining cool on the shares cited worries about the stock's valuation. RIM has been on a tear since last summer, with its shares rising about 175% before topping out at around $176 last week.
The tech-heavy Nasdaq Composite Index logged a gain of about 26% during that same period, while the S&P 500 Index picked up around 19%.
Rising estimates from analysts have helped to tempered the valuation somewhat. At around $200 Friday, RIM trades about 30 times revised earnings estimates for the next four quarters. That's slightly below the stock's price-to-earnings ratio before the earnings report came out Thursday evening.
Still, that's above the average P/E ratio of 21.2 for the wireless sector, according to Thomson data.
Ittai Kidron of CIBC World Markets admitted in a note to clients Friday that he was wrong earlier when he predicted that Wall Street's estimates for the company were too aggressive.
However, he maintained a neutral sector-perform rating on the shares, citing valuation.
"Clearly, we didn't appreciate how much momentum RIM could build in the first quarter and missed the call," Kidron wrote. "Given the share-price expansion (and expecting an upward response to the results), we remain positive on the fundamentals, but believe this is reflected in the premium valuation."
Casey Ryan of Nollenberger Capital also remained neutral on the stock, citing a "persistent downward gross-margin trend" as the company's revenue mix leans more to hardware compared with services.
"We believe as the euphoria around the stock split dissipates investors may find more attractive entry points," he wrote.
Street targets aggressive
Most of Wall Street, however, believe that RIM has much more breathing room. Nearly every analyst covering the stock lifted their price target Friday. The new targets range from a low of $180 to a high of $300, with the median target at $235.
Before the earnings report, targets on RIM ranged from $125 to $240, with $180 as the median, according to Thomson data.
"We continue to see excellent upside potential from even these levels," Rob Sanderson of American Technology Research wrote to clients. "There has never been a unit opportunity as massive as the cell-phone market, which is at the beginning of a disruptive shift toward RIMM's market-leading strengths and 300-carrier global channel."
Sanderson, who boosted his price target from $215 to $300, added that "we would be aggressive buyers today."
Comparisons with Apple, Palm
Investors are now valuing RIM nearly on par with Apple, which trades about 33 times estimated earnings.
The Mac and iPod maker has seen its shares jump nearly 50% since the first of the year since announcing its iPhone, which goes on sale later Friday.
Some have worried that the iPhone could siphon customers away from RIM. But most analysts discount this possibility, noting that the bulk of RIM's business comes from the corporate market, while Apple is aiming the iPhone more at upscale consumers.
Ironically, RIM currently trades at a discount to Palm, which saw its shares slump nearly 4% Friday after reporting disappointing results. At its current price, Palm trades about 47 times estimated earnings for the next four quarters.
Palm's high-valuation figure is partially the result of Wall Street analysts slashing their earnings estimates for the stock by a deeper percentage, compared with the stock's 15% drop in value since peaking in mid-March. Palm shares still trade about 20% above their level at the first of the year, before takeover rumors pushed the value of the stock close to the $20 mark.
(END) Dow Jones Newswires"
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