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Gateway rises on upgrades, Compaq slips on CEO news

Gateway rocketed 15 percent Friday after a flurry of upgrades, while Compaq Computer Corp. (NYSE: CPQ) slid despite an analyst upgrade following the company's announcement of a new CEO.

Compaq fell 1.75 percent, down 7/16 to 24 9/16, leading volume on the New York Stock Exchange. Gateway, rising 9 7/8 to 72 3/4, was also among the most active NYSE issues.

Gateway received a flurry of upgrades after it tiptoed past earnings Thursday. ABN AMRO upgraded it from "hold" to "outperform", and set an $84 price target for shares. Donaldson, Lufkin & Jenrette upped it from "market perform" to "buy," Deutsche Banc Alex Brown from "buy" to "strong buy," and PaineWebber from "neutral" to "attractive." ING Barings also upgraded Gateway to "strong Buy" from "hold."

U.S. Bancorp Piper Jaffray analyst Ashok Kumar also reiterated a "buy" rating on the stock. Gateway appears to be coming in aheadof the convergence curve, analysts said. But "with incremental share gains becoming more difficult and the commoditization of hardware, consumer centric vendors such as GTW will have to maneuver carefully around the minefields ahead," Kumar added in his report, which set a 12-month price target at $85 to $90 a share.

Morgan Stanley Dean Witter upgraded Compaq from "neutral" to "outperform" Friday. Analyst Gillian Munson raised her rating one day after the giant PC maker tapped Michael Capellas as its new CEO. Munson upgraded set a price target of $34 a share.

The upgrade "is fundamentally an initial vote of confidence that Compaq, which named a new CEO, is headed in the right direction," she said in a brief. She added that trouble for near-term financial numbers is still to be expected, though momentum in the company's shares will slowly start to turn positive.

-- Reuters contributed to this report.