Bear Stearns Upgrades PalmOne to 'Peer Perform'

Analyst Andrew Neff cites upside in shipments of the Treo handheld device

Bear Stearns upgraded PalmOne (PLMO ) to peer perform.

Analyst Andrew Neff says he upgraded the maker of Palm-branded products following better than expected third-quarter results, and says the stock is fairly valued at current levels. Neff says higher revenues and earnings per share came upside in Treo shipments (137,000 units, vs. his 88,000 esimate), higher average selling prices owing to the mix of shipments, fewer promotions, and increasing web sales.

Neff notes PalmOne faces challenges, including sluggish PDA sales (72% of third-quarter sales), increasing competition in the smartphone market from entrenched competitors, a lack of visibilty in Treo 600 demand, and lingering component shortages. He upped the 65 cents fiscal 2005 (May) loss estimate to 50 cents earnings per share. He sees 70 cents fiscal 2006 earnings per share.

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