Saturday, April 4, 2009

Yes, you actually can trust stock analysts

Research In Motion Ltd. [RIM-T] did it: Despite concerns that the BlackBerry maker would fall victim to soaring marketing costs and a grim economy, it blew past expectations when it released its fourth-quarter results on Thursday, sending its stock on a remarkable 19.1-per-cent tear Friday.

Analysts are now busily shredding their earlier estimates on the stock. By Friday afternoon, at least 10 analysts had either upgraded their recommendations or bumped up their target prices – or both.

But this newfound bullishness for RIM raises a question about the stock, and other stocks that have returned to favour after proving skeptics wrong: Is the sudden shift toward bullishness good news for the share price, or does it mean that the shares are bound to disappoint?

One problem with RIM is that, at least in Canada, it regularly hogs the front pages of major newspapers because the company is celebrated as a Canadian success story.

No comments: