Shares of

PalmOne

(PLMO)

rose more than 6% in early trading on Monday after J.P. Morgan upgraded the handheld maker's stock.

Investors and analysts have raised general concerns about PalmOne's business model and specific worries about the upcoming launch of a new Treo smartphone, noted J.P Morgan analyst Paul Coster in a research report issued on Monday. But PalmOne's stock has priced in those concerns, Coster wrote.

"We believe

PalmOne is trading at an attractive valuation level, and is now overly discounting the risks associated with the new Treo launch," Coster wrote. "We expect the stock to outperform the mean of our coverage universe in the shorter term."

In recent trading, PalmOne's stock was up $1.71, or 6.4%, to $28.66.

The handheld maker's shares have traded off sharply over the last two months. Indeed, by Friday, the stock was down some 36% since it hit a 52-week high of $41.93 on Aug. 2.

PalmOne produces both personal digital assistants, or PDAs, and smartphones. While the company dominates the PDA space, that market has largely stagnated, particularly in the U.S.

And although PalmOne's Treo smartphone has been a hit, the company faces growing competition in the segment.

Its most recent quarter helped to highlight investor concerns. While the company's earnings far

exceeded estimates, it issued a particularly disappointing outlook for its current period.