Out of the Gate: First Marblehead soars on upgrade

First Marblehead Corp.'s stock leaped at the opening bell Thursday after a Friedman Billings Ramsey analyst who had been particularly bearish on the student loan service company upgraded the stock.

Shares soared 51 cents, or 17.1 percent, to $3.49 in morning trading. The stock has plummeted from a 52-week high of $42.50 set last July.

Analyst Matt Snowling upgraded First Marblehead to "Market Perform" from "Underperform."

Based in Boston, First Marblehead charges fees for helping banks bundle their student loans into bonds and sell those bonds to investors.

Demand for bonds backed by student loans has wilted during the credit crisis, and First Marblehead's prospects for new business has wilted along with it. The company has not facilitated a bond deal in more than six months, and its stock has lost 90 percent of its value in that time.

Snowling said there are now indications that the student loan bond market "is beginning to thaw."

First Marblehead's stock trades as if the company's contracts to help funnel payments from students to the bonds are almost completely impaired, Snowling said.

There is enough of a chance now that the student loan bond market reopens or another company buys First Marblehead to counteract that risk, he said.