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Palm Inc. (PALM) Jumps on Upgrade



By Elizabeth Harrow
14 September 2007 @ 10:01 am EST

Palm Inc. , maker of the Treo smartphone, was upgraded this morning from "market perform" to "outperform" by Morgan Keegan. Covering analyst Tavis McCourt noted the approval by Palm shareholders of its recapitalization deal with Elevation Partners as the impetus behind the ratings boost, saying that it "brings more financial discipline and already apparent improvements in strategic focus."

Quotes
PALM 5.9 0.57

SYMBOL LOOKUP

McCourt also noted that Palm's current valuation is "extremely compelling," assuming the company's turnaround strategy has legs. In fact, the shares Palm have lost more than 23% in value from their March 21 high close of $19.45. The stock is now facing overhead resistance from its bearishly crossed 10-week and 20-week moving averages, though today's gains may help PALM muster the momentum to challenge these levels the shares are already up nearly 5%.

Luckily, PALM is well-positioned to capitalize on the upgrade. Bearish investors have sold short nearly 30% of the stock's available float, resulting in a short-interest ratio of more than 10 trading days to repurchase all these shares at PALM's average daily volume. The stock could also benefit from further upgrades Zacks reports that 12 of the stock's 13 covering analysts rate it a "hold" or worse.

Copyright Schaeffer's Investment Research

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