Smith Micro Still Worthy

Smith Micro Software, Inc. (SMSI - Analyst Report) is a developer of wireless communications software and utility software for multiple OS platforms. It has significant relationships with several large cellular providers and OEM cell phone manufacturers.

We remain encouraged by the company's recent results, strong brand recognition, and robust customer pipeline for 2009. However, we believe the weakening macro environment and declining consumer spending is likely to be challenging for its consumer business.

We maintain our BUY rating on the stock as we believe the company is poised for strong growth driven by continued strength in Connectivity and improvement in Multimedia segments. Moreover, the stock is trading at a huge discount to its peers. As such, we raise our six month target price to $8.50 from $6.00.

Anita Mohata contributed to this report.