Hot Stocks: Sirius Satellite, Under Armour Among Big Movers

Earnings updates and analyst upgrades were some of the catalysts behind the most actively traded stocks on Tuesday.

Sirius Satellite Radio rose amid heavy trading volume after the satellite radio provider reported a narrower-than-expected quarterly loss. New York-based Sirius reported a loss of 8 cents a share on revenue of $226.4 million. Analysts polled by Thomson Financial on average expected a loss of 10 cents a share on revenue of $228.3 million.

David Bank, an analyst with RBC Capital Markets, told CNBC the the real story for the stock was the merger with XM Satellite Radio .

"There are definitely improved odds of the merger going through," Bank said. "What is strange is that the arbitrage spread between XM and Sirius is wider than it's been since the transaction has been announced. That doesn't make any sense, that should narrow."

Sun Microsystems shares jumped after the company reported stronger-than-expected earnings for the fiscal fourth quarter. Sun posted earnings of 9 cents a share on revenue of $3.84 billion, compared with the Wall Street forecast of 5 cents in earnings on revenue of $3.84 billion.

Chief Executive Johnathan Schwartz told CNBC said it remains focused on the M&A market. "We're definitely focused on being a consolidator in the marketplace," he said.

Goldman Sachs analyst Laura Conigliaro reiterated a "buy" rating on the stock and said margins were much stronger than expected. "We like the stock set-up here," the analyst said. "There's a lot to criticize in this story, and we think most investors probably will stop there.

"That said, despite Sun's weak revenues, we are already raising earnings on favorable mix shifts –- even before a restructuring which we expect on or before Sept.5, the date of a just-announced Sun analyst meeting," she added.

Under Armour shares jumped 15% after the sports apparel maker reported strong quarterly earnings and increased full-year guidance. The Baltimore, Md.-based company posted a second-quarter profit of 11 cents a share, trouncing Street estimates of 3 cents.

S&P Equity Research lifted the price target on the stock to $75 from $70. "We see continued strong brand momentum as UA launches new products and categories and expands distribution," said analyst Marie Driscoll.

Moving to the downside, shares of Alcatel-Lucent plunged 10% after the telecom equipment maker reported quarterly earnings below expectations.

Peter Kang is a markets writer at CNBC.com and can be reached at [e-mail].