Morgan Stanley analyst Ehud Gelblum said while the troubles at RIM are well known, the investment firm believes estimates for the company need to come down even further over the next six months.
"We believe the fundamental story at RIM is essentially broken and that the most likely way to unlock value from the company is through either a strategic option or selling off the operations," Gelblum said as the bank downgraded the company to "underweight."
"We therefore believe the next six-nine months are likely filled with the competing factors of rapidly deteriorating fundamentals on the one hand and stories of potential strategic options on the other, leaving the stock pushed and pulled strongly in both directions."
Shares in RIM traded as low as $9.27 on Monday on the Toronto Stock Exchange, its lowest level since 2003 after adjusting for stock splits. The stock closed down 76 cents at $9.36.
The drop came as RIM dismissed a Sunday Times newspaper report on the weekend that suggested the company was considering selling its handset manufacturing unit or a stake in the whole company.
Speculation that RIM may be sold or broken up increased earlier this year after the company hired JPMorgan Chase & Co. and RBC Capital Markets to help evaluate its strategic options.
"RIM has hired advisers to help the company examine ways to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives," RIM said in a statement.
"As (CEO) Thorsten (Heins) said on the company's fourth-quarter earnings call: 'We believe the best way to drive value for our stakeholders is to execute on our plan to turn the company around.'
"This remains true."
RIM is scheduled to report its latest quarterly earnings results on Thursday and provide a business update to investors.
The average analyst estimate is for a profit of a penny per share and $3.13 billion in revenue, according to those surveyed by Thomson Reuters.
Scotiabank analyst Gus Papageorgiou said investors will be looking for a clear message from the company when it reports its earnings on Thursday.
"From an outside perspective, putting the company up for sale seems to be a rational and realistic alternative given the seeming insurmountable challenges it faces," Papageorgiou wrote in a note to clients.
"However, outsiders do not have a full picture. In our view, given the recent turn towards an operating loss, RIM shares have become more of a gamble than an investment. Mr. Heins needs to help investors understand why the gamble is worth it."
RIM began cutting jobs last week as part of a plan to find $1 billion in savings by the end of its 2013 financial year.
The company has been working to turn around operations after watching its market share eroded by Apple's iPhone and smartphones running Google's Android operating system.
It hopes the debut of its BlackBerry 10 operating system and a new line of BlackBerry smartphones later this year will help keep its subscribers from defecting to other devices, particularly in the United States.
RIM also launched its BlackBerry Jam tour earlier this year in an attempt to woo software developers into developing applications for the company's devices.
However, speculation has been growing that RIM's efforts are too little too late, and that the BlackBerry maker could ultimately be sold off.
At Morgan Stanley, Gelblum noted there are BlackBerry users that will continue to remain loyal to the company for security or personal reasons, but the number is relatively small at 10 million to 20 million.
"To reach break-even, at those revenue numbers, we calculate the company would have to eliminate 90 per cent of its 16,500 employee base," he said, speculating on what a scaled-down RIM would look like.
"Getting to this niche operating state, however, is not likely RIM can do itself, and we believe would require a third party partner and likely as a private company."