By Dan Gallagher

SAN FRANCISCO (Dow Jones) -- In the wireless-device industry, there is almost no competition. Research In Motion earned nearly $400 million last quarter and sells one of the most popular smart phones in the business; Palm Inc. lost nearly $100 million in its latest period and is banking heavily on a single device that has not even hit the market yet.

In this case, however, Wall Street lately seems to be leaning toward the riskier play.

Such was evident on Wednesday, when RIM (RIMM) got chopped to the equivalent of a sell rating by one broker and was initiated with a lukewarm view by another -- both of which questioned the company's ability to maintain profit levels for its mega-popular BlackBerry family in the hyper-competitive wireless market that has also been crimped by the slowing economy.

Palm (PALM), on the other hand, has been riding strong buzz as the company prepares the launch of its Pre smart phone later this year. The stock has been upgraded to buy ratings three times in the past month.

Chris Whitmore of Deutsche Bank, who already had the stock at a buy, boosted his price target on Palm to $12 from $10 on Wednesday.

"Since their earnings release last week, we have conducted a round of checks on Palm and remain confident in the potential for their new Pre smartphone to turnaround the company's results," Whitmore wrote in a note. "The Pre timetable seems on track at least, and both carrier and developer interest remains high."

Palm is preparing to launch the touch-screen Pre in an exclusive relationship with Sprint (US-S) by June 30. Sales of the company's other smart-phone devices have fallen sharply in the meantime, and the company had to raise more capital in a recent stock offering to get the funds to launch the device and continue to develop the product line.

By contrast, the sentiment around RIM has been growing more bearish of late. Ehud Gelblum of J.P. Morgan took over coverage of the stock from another analyst, and cut the broker's rating from overweight, or buy, to underweight, which is the equivalent of a sell call.

In a note to clients Wednesday, Gelblum said RIM "is already operating close to its peak earnings power" as further growth in sales volume will be offset by price declines and growing expense levels.

"With enterprise net adds falling victim to rising levels of unemployment, this places the burden of growth solely on the consumer side where we believe replacement rates should decline with the overall handset market and as the company pushes more into international where replacement rates are significantly lower than in the U.S," Gelblum wrote.

In another report, Shaw Wu of Kaufman Bros. started RIM with a hold rating, citing worries about the recent declines in the company's profit margins as RIM has spent heavily to design and launch new smart phones such as the touch-screen BlackBerry Storm -- designed to primarily compete against the popular iPhone from Apple Inc. (AAPL)

"We would like to see some stabilization in its operating margin before getting constructive on the shares," Wu wrote in his report.

Shares of Palm were trading up 5.7% to $8.90 Wednesday morning. The stock price has more than doubled this year since the company first introduced the Pre at a trade show in January.

RIM shares were last trading down 1% at $43.75. The stock has plunged more than 25% since the company warned of lower-than-expected earnings in early February. The company is slated to make its next full quarterly report on April 2.

Overall sentiment on Wall Street still favors RIM. About 57% of the analysts covering the stock rate the shares as a buy, while only 38% of Palm's analysts have similar views, according to data from Thomson Reuters.