Despite Research In Motion’swarning that it could report its second-consecutive quarterly operating loss, one firm has upgraded the BlackBerry maker’s shares based largely on valuation.
“A lot of bad news is in this name already — they’re acknowledging the operating loss that’s coming,” said Alex Gauna, a senior analyst at JMP Securities. “We’re just pointing out very simply that the company has put out M&A as a strategic option for itself and it’s hired financial advisers, and that could lead to a sort of pop or valuation rally later this summer.”
For investors who have shorts on RIM shares, this could be an opportune time to cover them, Gauna told CNBC’s “Squawk on the Street.” On Wednesday, he upgraded the stock to “market perform” from “market underperform.”
The company’s more than $2 billion stockpile is an encouraging sign, as RIM undergoes measures to shake up management and look into restructuring efforts before it is too late, Gauna said.
“I think that Research In Motion is going to have to find some strategic partners, or it’s going to have to go the way of or Nokia and just get more and more irrelevant,” he said.
Gauna emphasized how important it is for Research In Motion, which maintains a 78 million subscriber base, to pursue strategic alternatives while it still has inherent intellectual property value.
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JMP Securities currently makes a market in this security.
Follow Katie Little on Twitter @katie_little.