Novatel Wireless stock up as analyst boosts rating

Shares of Novatel Wireless Inc. rose Wednesday afternoon as an analyst upgraded the wireless modem maker, saying it is on track to meet second-quarter expectations.

The stock jumped 53 cents, or 4.9 percent, to $11.41. Shares are down 30 percent since the start of the year.

Morgan Joseph & Co. analyst Kevin Dede boosted his rating to "Buy" from "Hold" with a $13 price target, implying he expects the stock to rise 20 percent over Tuesday's $10.88 close.

A Novatel presentation at Tuesday's Oppenheimer 2008 Communications & Technology Conference showed second-quarter product sales are at "solid levels," Dede said, implying the company is on track to meet his $87.5 million sales estimate for the period.

Analysts polled by Thomson Financial expect, on average, sales of $87.7 million for the period. Final results are due in early August.

The upgrade comes after first-quarter sales and earnings fell sharply, but still met analysts' expectations.

"While recent results leave abject bulls wanting, we think ... that Novatel has righted some of the in-house sales execution issues hindering its performance" in the first half of 2008, Dede said in a note to clients.

The new rating is a bet San Diego-based Novatel can flawlessly introduce its new products and turn them into sales during the second half of 2008, he said.

A company representative was not immediately available for comment.