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Blackberry shares rise following analyst upgrade

The Associated Press

Shares of BlackBerry, formerly known as Research In Motion Ltd., increased Wednesday as an upgrade from Morgan Stanley helped add to a months-long rally.

THE SPARK: The company's stock has more than doubled since September on the belief that new BlackBerry 10 phones will help turn around the business. Morgan Stanley analyst Ehud Gelblum on Wednesday jumped on board, lifting his rating on BlackBerry to "Overweight" from "Underweight."

THE BIG PICTURE: The Canadian company is relying on the redesigned BlackBerry to fuel a comeback. The pioneering brand lost its cachet after Apple's 2007 release of the iPhone, which reset consumers' expectations for what a smartphone should do. The company's shares sank for years, hitting a bottom last September.

Blackberry unveiled the new BlackBerry Z10 and Q10 in late January. The Z10 is available for purchase in a number of markets around the world and will be available in the U.S. this month, while the Q10 is expected to go on sale in the U.S. in May or June.

THE ANALYSIS: Gelblum thinks the new devices will increase average prices for the company's phones and make BlackBerry's phones more profitable. He's more optimistic about BlackBerry even though he still doesn't believe that the new phones will convince significant numbers of Android or iPhone users to buy BlackBerrys instead.

As smartphone sales grow overall, RIM could still succeed with the BlackBerry 10 without requiring iPhone and Android users to switch.

The analyst raised his price target on the company to $22 from $10.

SHARE ACTION: Shares increased $1.17, or 7.8 percent, to $16.20 in afternoon trading. The stock hasn't touched $22 since October 2011.