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Computer Associates climbs on upgrade

Shares of the software maker surge after Prudential Securities upgrades the company's stock from a "hold" rating to "accumulate."

Computer Associates International shares surged Thursday, after Prudential Securities upgraded the software maker's stock from a "hold" rating to "accumulate."

Shares closed regular trading up $4.56, or 21 percent, to $25.88.

Prudential Securities analyst John McPeake said BMC Software's positive pre-announcement Wednesday likely signals a bottom for Computer Associates and the rest of the mainframe software sector.

BMC, which McPeake upgraded from a "hold" rating to a "strong buy," shot up 41 percent.

"With CA's stock trading near five-year lows, at the current valuation we think downside risk is limited," he said in a research note.

Computer Associates topped analysts' reduced estimates last quarter, earning $321 million, or 54 cents a share, on sales of $1.68 billion.

Analysts polled by First Call expect it to earn 40 cents a share in its third quarter on sales of around $1.4 billion.

The stock moved as high as $79.44 in January before falling to a 52-week low of $18.13 in December.

Eleven of the 20 analysts tracking the stock maintain either a "buy" or "strong buy" recommendation.