Considering the stock just set a 52-week high after running up nearly 50%, one would expect more enthusiasm for shares of RealNetworks (RNWK) - Get Report.

The move higher seems to reflect a number of steps taken to extend RealNetworks' reach in the digital music market.

It acquired Seoul, Korea-based

WiderThan

( WTHN), which supplies ringback tones, music and mobile entertainment to more than 50 wireless carriers around the world, for $350 million.

The company also

inked a deal with

SanDisk

(SNDK)

to integrate Real's Rhapsody music service into a SanDisk line of MP3 players.

And just last week, the company announced it was pairing up with

Best Buy

(BBY) - Get Report

to build its

new online music store.

But those latest actions have failed to inspire analysts to upgrade the stock.

And according to Yahoo! Finance, the stock has been downgraded four times since April.

"I've been surprised at how negative people have been on the stock," says Standard & Poor's equity analyst Scott Kessler, who has a hold rating on the stock. "The entire time the stock has been going up, analysts have been more negative."

Kessler says there is "a lot to be optimistic about" for the company, but concedes there is still too much risk to recommend a buy. (He does not own shares of RealNetworks and Standard & Poor's does not do banking.)

Based on its P/E ratio, the stock still looks cheap, Kessler says.

He is forecasting an EPS of 75 cents for 2006, which represents a multiple of about 15. The consensus from Thomson First Call is 80 cents a share for the full year.

In addition, the company has accumulated substantial cash from its

$761 million antitrust settlement with

Microsoft

(MSFT) - Get Report

.

Part of the terms also called for Microsoft to promote Real's music and games offerings throughout its MSN network, Kessler says.

But how much of that cash surplus remains is uncertain.

While the WiderThan acquisition highlights a sensible move beyond the desktop and a single portable device, the purchase price was significant to a company of Real's size, says Michael McGuire, vice president of research for mobile devices and consumer services at Gartner.

"After paying for WiderThan, you've got to wonder what's left over from the Microsoft settlement," McGuire says. "Although I can understand the strategic value, I'm not sure what they have left over for marketing."

Regardless of RealNetworks' near-term strategy, the company still can't escape that it operates in a competition-intensifying online entertainment market that continues to chase one mega-player.

The digital music market is "a very, very crowded field, and that is typically not a good thing for companies that are really reliant on one business," Kessler says.

Microsoft,

Apple

(AAPL) - Get Report

,

Napster

( NAPS),

Time Warner's

(TWX)

AOL,

NewsCorp's

(NWS) - Get Report

MySpace and even big-box discount chain

Wal-Mart

(WMT) - Get Report

are among the ever-growing list of music sellers these days, with essentially the same catalog of tunes.

Real's Rhapsody music service is considered the market leader in terms of

digital music subscription services, but customers have yet to embrace the model in the same way iPod owners have flocked to Apple's a la carte download shop.

"Right now I don't see anything on the horizon that's going to change Apple's dominance in the business," Kessler says.

Still, among subscription-based players, Real is "maintaining its strategic push and persevering. It is continuing to compete," McGuire says.

That just might not mean another 50% run-up anytime soon.