TORONTO (Reuters) - Research In Motion Ltd's RIM.TO RIMM.O shares shot up more than 10 percent on Friday as analysts upgraded ratings and raised estimates to reflect big growth expectations for RIM's BlackBerry devices.
The smartphone maker said after the market close on Thursday that its third-quarter profit more than doubled as it made a big push into the consumer market. The results also allayed some fears of slowing demand from RIM's financial services customers in wake of the credit-market meltdown.
"Although the earnings were not a blowout, against a backdrop of recessionary concerns, a potential downturn in consumer spending, and credit crunch-induced turmoil in the financial-services sector, the achievement is noteworthy," Canaccord Adams analyst Peter Misek wrote in a note to clients.
RIM shares closed at $118.63, up $11.64, on Nasdaq, and up C$11.05 at C$117.57 on the Toronto Stock Exchange.
The results also highlighted a fundamental shift taking place in the Waterloo, Ontario-based company's client base.
While executives, lawyers, and other professionals have historically made up the bulk of RIM's customers, the retail consumer is now making a strong showing. Noncorporate and nongovernment users accounted for about 34 percent of the company's subscriber base at the quarter's end.
What's more, Black Friday, the retailing day that kicks off the U.S. holiday shopping season, was the company's strongest day ever for subscriber additions, co-CEO Jim Balsillie told analysts on Thursday.
As the BlackBerry becomes more of a mainstream product, RIM will have to persuade the consumer market that its smartphone -- a device that combines e-mail and calling functionality with Web browsing and multimedia -- is worth its premium price.
Because of their expanded functionality, BlackBerries and other smartphones tend to be more pricey than regular mobile phones. However, many carriers are offering them at reduced prices to attract subscribers.
For now, RIM's reassuring results, combined with a forecast of continued growth, continue to please analysts.
"We think RIM falls somewhere between hyper-growth and supercharged growth," Bear Stearns analyst Andy Neff said in a note that hiked his stock rating to "outperform" from "peer perform" along with profit estimates.
"(RIM) is creating large new markets, which are expanding globally, with diminished competition from mainstream handset vendors and alternate e-mail solutions."
The stock is set to charge higher in 2008, said Raymond James analyst Sera Kim, amid a strong line up of new devices, growing subscriber base, a bigger push into the consumer market, and a robust smartphone market.
Demand should also grow as RIM expands internationally, said UBS analysts Maynard Um and Jeffrey Fan. They see strength in such markets as Germany, Spain, France, Latin America and India.
"Though we remain cautious with regard to an after-effect from the financial services vertical, we are comfortable that management's guidance reflects the uncertainty of both financial services as well as consumer seasonality," they wrote.
Investors had worried that RIM would not be able to maintain its torrid pace of growth while a credit and liquidity crisis roils the financial-services companies that buy its smartphones.
However, Balsillie said the enterprise market remains underpenetrated and added he sees plenty more opportunity for growth.
Editing by Peter Galloway