Less than two years ago Research in Motion (NASDAQ: RIMM) was a $150 stock.

Recently, however, pressure from new smartphones, particularly the Apple Inc. (NASDAQ: AAPL) iPhone, taken together with the general market sell-off last March, briefly pushed the shares below $40. And, over the last year, RIM has recovered much less than the market . Now, the stock is up only 15% compared to the Dow, which has risen nearly 35% over the same period.

RIM’s shares were pressured in late March when the company said it earned $1.27 per share ,up 37% from the same period last year. The number missed Wall St. targets and the stock moved down from $74 to $68 in only two days.

Expectations from RIM’s earnings for the fiscal year ending next February vary widely among analysts, whose estimates range from EPS of $4.66 to $6.07.

Using Trefis, a financial forecasting Website, 24/7 Wall St. looked at how RIM’s share price could be effected if certain assumptions were changed.  Trefis bases its forecasts for stock price movements on changes in revenue, margins and balance sheets.  It then uses these changes to forecast RIM’s stock price over the next few years. According to its site, Trefis analysts spend weeks evaluating each stock in its database and utilize commonly used valuation methodologies to determine a share price for each company it covers. That data is then put into a model that allows other analysts to manipulate key assumptions and see how they change the company’s stock price.

Regardless of the methodology, RIM’s current valuation is based on the size of the smartphone market, its share of that market, its gross margins and e-mail server business. For the company to hold its stock  at the current level on the NASDAQ, RIM will have to keep adding market share and the total smartphone market will have to continue to grow. The company’s gross margins can shrink somewhat but not enough to substantially undercut current earning.

24/7 Wall St. changed three of the assumptions Trefis makes to support RIM’s current price. The first is that RIM’s piece of the global market will move from 4% this year to 8% in six years. The second assumption is that worldwide mobile phone sales will rise from 1.1 billion units to 1.9 billion units a year over the next six years. The last is that RIM’s push e-mail revenue per business subscriber will drop from the current level of $6.86 a month to $5.60 in six years.

24/7 cut RIM’s percent of global market share to 4%, flat with what it is today. The cellphone industry has become too competitive for RIM to gain share. It is already losing customers to Apple and handsets based on the Google Inc. NASDAQ: GOOG) Android operating system.  Large handset companies such as Nokia Corp. (NYSE: NOK) are also aggressively entering the high-end of the market where RIM gets most of its business. 24/7 dropped the model’s number for RIM’s share of the global handset sales from 8.19%  2.89% over six years, which is where it is today. 24/7 also cut estimates for total handset sales in six years from 1.83 billion to 1.57 billion.

Finally, 24/7 adjusted RIM’s revenue per business subscriber to $5 six years from, which is below the Trefis estimate of $5.60

The net effect of these changes is that RIM’s fair market stock price drops from its current level of $73 to $31.17.

The projected stock price number is reasonable, particularly based on the market’s concern about the tremendous competition RIM faces and the extent to which that competitions has already take its share of total handset  – especially in smartphone sales. RIM is already in the midst of losing business and that will only get worse.

Douglas A. McIntyre

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