Napster Upgraded: 'Not Getting Any Credit for the Brand, Technology'

Napster (NAPS) in its hey day was all about getting music for free. Now you get something else for free: Napster itself.

Bear Stearns analyst Kunal Madhukar Monday upgraded NAPS shares to Outperform from Market Perform, with a $2.50 target. He notes that as of the end of the company’s fiscal third quarter ended December, the company had $69 million in liquidity, almost equal to its $75 million market cap as of Friday’s close. He says investor disinterest has created “a compelling buying opportunity” for investors with a 12-18 month horizon.

“Napster is not getting any credit for the brand, technology, portal [and] partnerships,” he writes. A worst case scenario, he says is a valuation of $1.60-$1.65 a share for cash and NOLs if the company decided to shut down in the next 1-2 years.

Napster Monday is up 19 cents, or 11.7%, at $1.82.