The Pre is to Burger King as iPhone is to MacDonalds.

Palm shares climb on upbeat RBC report

NEW YORK (AP) - Palm Inc. shares climbed Tuesday after RBC Capital Markets hiked its price target for the stock, saying Palm has the "special sauce" necessary to help lead the smart phone market.

In a note to investors, RBC analyst Mike Abramsky raised his price target to $25 from $18.

Sunnyvale, Calif.-based Palm is the midst of an uncertain comeback effort, looking to ride its well-reviewed Palm Pre smart phone back to success in the mobile computing market. Rivals Apple Inc., the iPhone maker, and Research in Motion Ltd., which makes the Blackberry line, have crowded Palm out over the past few years.

In a report out Tuesday, Abramsky said he expects smart phones to take 35 percent of the handset market by 2012. That would mean 405 million smart phones, up from his previous forecast of 395 million, he said.

"As a turnaround, Palm faces near-term challenges," Abramsky said. Palm lacks the "scale, marketing budgets and balance sheets" that RIM and Apple enjoy, he said.

Nevertheless, Abramsky said, "The 'New Palm' in our view possesses the 'special sauce' necessary for global smart phone leadership."

He pointed to Palm's management, business structure, mobile operating system and "unique innovations."

Shares jumped 52 cents, or 3.9 percent, to $13.75 in midday trading. The stock has ranged from $1.14 to $16.80 over the past year.

Palm shares climb on upbeat RBC report: Associated Press Business News: PALM - MSN Money