Analyst downgrades: Ethanol sector, BT, AMR and KYPH

MOST NOTEWORTHY: The ethanol sector, BT Group, AMR Corp and Kyphon were today's noteworthy downgrades:

Friedman Billings downgraded Aventine Renewable Energy (NYSE: AVR) and Pacific Ethanol Inc (NASDAQ: PEIX) to Underperform and VeraSun Energy Corporation (NYSE: VSE) was downgraded to Market Perform from Outperform. The firm said the ethanol market has become increasingly challenging as spot market prices have declined by 30% in the past few months and expect pressure to remain through 2008 as the industry's growing pains continue.
Morgan Stanley downgraded shares of BT Group (NYSE: BT) to Underweight from Equal Weight on valuation and regulation uncertainty ahead of Ofcom's first consultation document next week.
AMR Corporation (NYSE: AMR) was downgraded to Sell from Neutral at Goldman to reflect the company's U.S. exposure as they expect the U.S. economy to slow.
Banc of America downgraded shares of Kyphon Inc (NASDAQ: KYPH) to Neutral from Buy on valuation as the spread on the acquisition by Medtronic Inc (NYSE: MDT) has now narrowed.

OTHER DOWNGRADES:

Pepsi Bottling Group Inc (NYSE: PBG) was downgraded to Market Perform from Outperform at Bernstein.
Oppenheimer downgraded Signature Bank (NASDAQ: SBNY) to Neutral from Buy.
ThinkEquity downgraded BioCryst Pharmaceuticals (NASDAQ: BCRX) to Accumulate from Buy.
Merrill Lynch downgraded Luxottica Group (NYSE: LUX) to Neutral from Buy.