Morgan Joseph Downgrades Palm (PALM) to Hold; Risk-Reward Ratio No Longer in Our Favor

April 17, 2009 8:07 AM EDT
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Price: $5.69 --0%

Rating Summary:
    0 Buy, 0 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 12 | New: 47
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Morgan Joseph downgrades Palm, Inc. (Nasdaq: PALM) from Buy to Hold.

Morgan Joseph analyst says, "We are downgrading our rating on Palm shares to HOLD from BUY given the stock's virtual achievement of our $10.00 price target. Palm closed the 30% discount (at the time of our January 9th upgrade) to Research in Motion's (Nasdaq: RIMM) valuation and now trades at 2.5x CY09 EV/Sales, in parity with RIMM's current 2.6x CY09 EV/Sales. We believe that, while Palm's share price could continue to benefit from upward momentum, the shares are fully valued and the risk-reward ratio is not attractive at this level. Should shares of Palm pull back to a level where the risk vs. reward scenario is once again attractive, we would revisit the valuation and our rating...We are maintaining our CY09 sales and non-GAAP EPS estimates of $612mm and a loss of $1.71, respectively. For CY10, we are also maintaining our estimates of $787mm and a loss of $0.97, respectively."

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Palm, Inc. (Palm) is a provider of mobile products. It offers Treo and Centro smartphones, handheld computers and accessories through a network of wireless carriers, as well as retail and business outlets worldwide.

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