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Palm Rallies As Analyst Upgrades On Strong Treo Sales
LOS ANGELES (Dow Jones) -- Palm Inc.'s stock rallied Tuesday, after a Needham & Co. analyst said sales of the company's Treo smartphones appear to be outpacing previous expectations, prompting him to upgrade the shares.
In recent trading, shares of Sunnyvale, Calif.-based Palm (PALM) climbed $1.72, or 5.3%, to $34.09 on volume of 1.7 million. The stock has ranged from $20.75 to $46.65 over the last 52 weeks and had an average volume of 1.1 million over the last 10 trading sessions.
Needham analyst Charles Wolf upgraded his stance on Palm's stock to buy from hold, setting a $40 price target, after checks showed strong demand for the Treo device.
"The growth of Treo sales is part of the rapid migration of organizer and mobile phone users to feature rich phones," Wolf said in a note to clients.
To be sure, the analyst pointed out that the company's backlog of firm orders for its signature smartphone stood at $214 million at the end of its last fiscal year to May. That equates to around 450,000 units, he said.
Industry data also show a sharp rise in shipments of smartphones.
And while company management has remained quiet on the possible introduction of a Treo device using Microsoft Corp.'s (MSFT) Windows Mobile operating system, speculation has sprouted it soon may launch just such a device.
Wolf expects the company could launch a Treo running Windows Mobile by the first quarter of calendar 2006 or sooner, he said.
"This version of the Treo could materially expand Treo sales into the enterprise because of the popularity of the Windows operating system in this market," he asserted.
Meanwhile, the launch of a Treo model aimed at mainstream customers - something that "could propel a hockey-stick increase in Treo sales" - continues to remain elusive," the analyst commented.
"In view of the volume upside such a phone could provide, it's likely that Palm is working on such a device," he offered.
(END) Dow Jones Newswires"
Posted to the site on 6th September 2005