Piper Jaffray upgraded RealNetworks (RNWK
) to outperform from market perform, explaining that the digital content software company has cash and a solid business model.
Analyst Aaron Kessler believes RealNetworks' music business segment remains on track. Meanwhile the company has been quietly acquiring a portfolio of investments in the gaming industry, which Kessler thinks is likely underappreciated. He says RealNetworks will have about $5.70 per share in cash by the end of the first quarter in 2007, and the company will likely use that money for acquisitions and share buybacks. He upgraded his $8.70 stock price target to $10. He sees 98 cents 2006 earnings per share (EPS) and 49 cents in 2007.