Analyst Says Verizon Earnings Bode Well for RIM (RIMM)

Canaccord Adams is out with a research note this morning considering what in-line earnings at Verizon (NYSE: VZ) mean for handset-maker Research In Motion (Nasdaq: RIMM). The firm reiterated its Buy rating and $60 price target on shares of Research In Motion.

Canaccord pinpoints several metrics issued with Verizon's results yesterday, including:

• stronger growth in smartphone sales, relative to broader handsets. Verizon indicated that smartphone sales were up to 37% of total handset sales during Q4, which compares to 30% in Q3. The firm believes this trend could be attributed to strong sales of Research In Motion's BlackBerry Storm, which saw increased interest given "a major shift in carrier subsidies toward the smartphone segment..."
  
• Verizon reported a "one-time benefit to EBITDA margins in the wireless division partially related to a boost in payments received from vendors." Canaccord feels this could have been connected to Research In Motion's aggressive promotion of the Storm, and notes that RIM may have compensated Verizon for this marketing initiative. This makes sense as Research In Motion's margins fell materially while Verizon's margins saw a jump. Keeping this in mind, Canaccord believes "RIM’s GM weakness in FQ3 and FQ4 could begin to improve in F10."
  
• recent industry checks have suggested that handset component pricing has falling about 10-15% given "aggressive bidding for new contracts." Put simply, Research In Motion would see a benefit to gross margins in upcoming quarters if this proved to be true.

Shares of Research In Motion are currently up 3.9% to $56.00. Canaccord's $60 price target suggests upside of about 7% from current levels.

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