Analyst says RIM’s base of BlackBerry subscribers may be undervalued by market

Research In Motion’s reputation is having a bit of a revival after being all but written off by many observers who think it has little change of competing against Apple and Android smartphones.

CIBC said Monday it has raised its target price on shares in Research In Motion (TSX:RIM) to US$17, up from US$8 a share, based on the strength of RIM’s customer base with older models of the BlackBerry smaretphone.

The CIBC analysis notes RIM has about 80 million smartphone subscribers and some of them will decide to upgrade when the BlackBerry 10 technology becomes available.

“With a January 30 BB10 launch date locked in, along with carrier and developer feedback now more clear, an upgrade of the existing subscriber base will be the most likely outcome,” analyst Todd Coupland said in a research note on Monday.

“Our rating change is based on RIM’s existing subscribers wanting to upgrade to BB10,” Coupland said.

CIBC also put a “sector outperform” rating on shares in Research In Motion (TSX:RIM) from “sector underperform” which was based on skepticism about its a new generation of products.

Coupland also said RIM looks “materially undervalued.”

Research In Motion shares closed Friday at C$11.61 in Toronto and at US$11.66 on the Nasdaq market. RIM shares were down three cents at $11.58 in early afternoon trading Monday.

CIBC’s revised price target is $2 above a price target of US$15 a share issued last week from National Bank Financial.

The BB10 devices are seen as a make-or-break development for the Waterloo, Ont.-based company as it competes against Apple’s iPhones, devices using Google’s Android operating system and a refreshed Microsoft smartphone system.

PC magazine analyst Sascha Segan said RIM also could have potential growth with “mad messengers,” teens and 20-somethings who want to stay constantly connected with their friends.

“That is BlackBerry’s other potential growth market,” said Segan, lead device analyst with New York-based PC magazine.

But it depends whether the social games they are playing will be available on the new BlackBerry 10 platform, he said.

Segan said the enterprise market that includes —— departments at companies, governments and corporations — a traditional strength for RIM — is up for grabs with Microsoft making a play with the Windows Phone and Apple making inroads.

“Business people are a big part of the equation here” he said.

Expectations are “spectacularly” low for BlackBerry 10, Segan said.

“RIM has really lowered expectations to the point where even the company’s survival would be a pleasant surprise. If BlackBerry 10 actually appears on its proposed launch date, that actually exceeds expectations.”