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Upgrade sparks Computer Associates shares

    Computer Associates shares moved up $2.90, or 8 percent, to $38.25 Tuesday after Prudential Securities analyst John McPeake upgraded the software developer from an “accumulate” rating to a “strong buy.”

    In a research note, McPeake said he is “more comfortable” with Computer Associates’ (NYSE: CA) recurring revenue recognition model. He also pointed out that IBM’s (NYSE: IBM) mainframe upgrade and new hardware cycle would result in a “positive newsflow” for CA.

    Computer Associates topped analysts’ estimates in its third quarter, earning $247 million, or 42 cents a share, on sales of $1.4 billion.

    Analysts were expecting a profit of 40 cents a share in the quarter.

    Computer Associates shares rallied up to a 52-week high of $74.38 in February before slipping to a low of $18.13 earlier this month.

    First Call Corp. consensus expects it to earn 44 cents a share in its fourth quarter on sales of $1.42 billion.

    Thirteen of the 20 analysts tracking the stock rate it either a “buy” or “strong buy.”