SUNNYVALE, Calif. ( TheStreet) -- Palm ( PALM) swayed in the warm market breezes Thursday as Citi lifted its sell rating and regulatory monitors offered a sunny forecast that called for the Pre to arrive at AT&T ( T) in May.

Palm shares rose 3% to $9.89 in premarket trading Thursday on the uplifting news.

The move comes after a report Wednesday that showed Verizon's ( VZ) torpid marketing support of the Pre and Pixi have made for a lackluster sales debut in the past two weeks.
Palm Pre
Palm Pre

Citi analysts upgraded Palm shares to neutral from sell Thursday. Also helping the bull case were reports that a Pre phone was under review at the Federal Communications Commission and scheduled to appear at AT&T on May 10.

Sprint ( S) and Palm introduced the first Pre phone on June 8, just hours before Apple ( AAPL) unveiled its latest version of the iPhone. The Pre and its lower-priced sibling, the Pixi, have received critical praise but have failed to gain much popularity with consumers who have a host of touchscreen phones to choose from.

The spread of the iPhone and Google's ( GOOG) Android devices like the Motorola ( MOT) Droid have helped push Palm back in line.

Palm is bleeding red and needs higher sales to turn the ship. Last year, Palm posted a net loss of $452 million on $323 million in sales. Analysts expect Palm to sell about 4 million phones this year -- if it has modest success at Verizon and AT&T.

--Reported by Scott Moritz in New York

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