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(Recasts; adds details) July 31 (Reuters) - Morgan Stanley upgraded consumer electronics retailer RadioShack Corp RSH.N to "equal-weight" from "underweight," and said increased demand for digital-to-analog converter boxes should drive sales in the near-term.
Last week, RadioShack posted a higher-than-expected second quarter profit as demand for digital television converters spurred a surprise increase in sales after several weak quarters.
Improvement in RadioShack's two-line speakerphone AT&T products could modestly offset pressure in the core wireless business, which accounts for almost 30 percent of the company's sales, Morgan Stanley said.
Morgan Stanley expects the company, which faces intense competition from Best Buy Co (BBY.N) and other chains, to earn $1.75 a share in 2008.
It had previously forecast 2008 earnings of $1.45 a share.
Shares of RadioShack were trading up 11 cents at $16.55 Thursday morning on the New York Stock Exchange. (Reporting by Mary Meyase in Bangalore; Editing by Pratish Narayanan)