A Deutsche Bank analyst raised his estimates and investment rating on

Computer Associates

(CA) - Get Report

Friday, saying he expects the company to continue building momentum.

"We believe Computer Associates has reached an inflection point in its model transition," analyst Brian Skiba wrote in a research note. In its last quarter, CA reported a profit, when calculated according to generally accepted accounting principles, for the first time since it introduced a new licensing program in October 2000.

Skiba said he expects the company's results to improve going forward. He upgraded the company to buy from hold, boosted his calendar-year 2004 earnings estimate to $1.05 a share from 77 cents a share, and raised his target price to $28 from $25.

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The analyst noted that his own revenue estimates have been ahead of Wall Street's consensus. But Skiba thinks that CA's cost structure shouldn't increase and that the company's margins will improve. "We do not believe this is well understood by the Street," he said. Skiba said he didn't actually increase his sales estimates for CA, but instead adjusted his cost-structure model.

However, the bad news is that mainframe sales have weakened and the

Securities and Exchange Commission's

investigation of CA is ongoing, Skiba said.

Shares of CA closed at $23.60 Thursday on the

New York Stock Exchange

.