Palm Hits 52 Week High: Pacific Crest Raises Target to $17

Jun.16.09 | About: Palm, Inc. (PALM)

Pacific Crest analyst James Faucette Tuesday morning raised his estimates on Palm (PALM), citing strong initial demand for the Pre smartphone.

Faucette said his checks find that 90,000 to 100,000 units were sold in the first week. And he adds that given the waiting lists at many outlets - he says there are about 30 names on the lists at each Sprint store - the company appears on track to beat his previous August quarter unit forecast of 500,000.

Faucette maintains his Outperform rating on the stock, but lifted his price target to $17, from $9. For the May 2010 fiscal year, he now sees revenue of $1.224 billion, up from $1.025 billion, which is still below the consensus at $1.463 billion. His loss per share estimate is now 97 cents, versus $1.26 previously.

The Pacific Crest analyst sees the company shipping 2,825,000 Pre units for the May 2010 year, with just 150,000 older models; his previous forecast was for 2 million Pre units, and 750,000 legacy units. Note that his forecast does not assume the addition of carriers in other markets, or any follow-on products after the Pre.

He also buys into the idea that the company could be acquired. “We believe Palm’s WebOS is the most attractive asset in the wireless industry, but that it may be worth substantially more to a potential acquirer than that which Palm can realize through selling its own products over the next two years,” he writes.

“The most attractive asset in the wireless industry?” Uh, heard of the iPhone? Or the BlackBerry?

PALM Tuesday is up 96 cents, or 6.8%, to $15.08, a new 52-week high.

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