American Eagle (NYSE: AEO) closed at $7.52 Friday. AEO is scheduled to report Q3 EPS on November 25. RBC Capital Markets lowered its price target to $14 from $15. AEO December option implied volatility of 120 is above its 26-week average of 74 according to Track Data, suggesting larger price movement.
Dollar Tree (NASDAQ: DLTR) closed at $35.28 Friday. DLTR is scheduled to report Q3 EPS on November 25. Deutsche Bank has a Hold rating and a $35 price target on DLTR. DLTR December option implied volatility of 84 is above its 26-week average of 59 according to Track Data, suggesting larger price movement.
Williams-Sonoma (NYSE: WSM) closed at $4.84 Friday. WSM said W. Howard Lester, Chairman & chief executive, sold about 4.2 million shares between October 29 and November 21. Lester also sold WSN shares from October 13 & 14th to cover a margin calls. WSM is scheduled to report Q3 EPS on December 4. Thomas Weisel lowered its 12-month price target from $10 to $8. WSM December option implied volatility of 168 is above its 26-week average of 68 according to Track Data, suggesting larger price fluctuations.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Some of the country's largest retail chains had good June sales, benefitting from consumers looking for a place to spend their tax rebates, but this was not the case for higher-priced department stores. Retailers offering big discounts were among the privileges ones as consumers chose to stay away from high prices.
Consumers spent on the basics, looking for bargains, boosting sales at some companies like Wal-Mart (NYSE: WMT), but resulting in losses for the others like Nordstrom (NYSE: JWN) and American Eagle (NYSE: AEO). This confirmed that retailers will face further weak demand even during the back-to-school shopping season, and more deep discounts will be needed.
As June is considered a key month for sales, merchants were hoping for a "stimulus" effect from tax rebates, despite worries tied to soaring gasoline and food costs. However, only companies offering cheaper gas like Wal-Mart, Costco (NASDAQ: COST) and BJ's Wholesale Club (NYSE: BJ) saw their dreams accomplished. Thus, Wal-Mart came with June sales growth of 4.3%, Costco reported a 9% increase in June same-store sales, while BJ's Wholesale saw a growth of 16.5%.
MOST NOTEWORTHY: American Eagle, Hologic and British Airways were today's noteworthy downgrades:
Friedman Billings downgraded American Eagle (NYSE: AEO) to Underperform from Market Perform citing slowing top-line growth, difficult macro-environment, and the challenging women's category.
Soleil cut Hologic (NASDAQ: HOLX) to Hold from Buy as it believes the cancellation of the FDA Radiological Devices Panel means a further delay in the tomosynthesis pre-market approval application.
ABN downgraded shares of British Airways (Other OTC: BAIRY) to Sell from Hold as it believes the recent rally in the face of higher oil prices is unjustified. Shares were also lowered at Deutsche Bank to Sell from Buy as it believes the company may not be able to raise ticket prices enough to offset higher fuel costs.
OTHER DOWNGRADES:
ArthroCare (NASDAQ: ARTC) was cut to Accumulate from Buy at ThinkPanmure.
ING downgraded J Sainsbury (Other OTC: JSAIY) to Sell from Hold.
RBC Capital downgraded Ceragon Networks (NASDAQ: CRNT) to Sector Perform from outperform.
MOST NOTEWORTHY: PhotoChannel Networks, BioMarin Pharmaceutical, Double-Take and Leapfrog Enterprises were today's noteworthy initiations:
Merriman believes PhotoChannel Networks (OTC: PNWIF) is positioned to become a leading provider to the digital photofinishing market through its offering of a fully-integrated solution to retailers. The firm started shares with a Buy rating.
Jefferies resumed coverage of BioMarin Pharmaceutical (NASDAQ: BMRN) with a Buy rating and $33 target, as they expect strong long-term growth from Aldurazyme and Naglazyme and is optimistic for Kuvan approval and a strong market launch.
ThinkEquity is positive on Double-Take's (NASDAQ: DBTK) impressive operating leverage and valuation and started shares off with a Buy rating and $28 target.
Needham initiated Leapfrog Enterprises (NYSE: LF) with a Strong Buy rating and $11 target. The firm expects Leapfrog to benefit from its turnaround initiatives in 2008 and for shares to be driven by improving sales and profits.
MOST NOTEWORTHY: Ericsson, Total SA, Research in Motion, MasterCard and Sun Microsystems were today's noteworthy upgrades:
Goldman upgraded shares of Ericsson (NASDAQ: ERIC) to Buy from Neutral and added the company to their pan-Europe Conviction Buy List, as they believe the factors that lead to the October earnings miss will be rectified and the company will report upside to Q4 estimates.
Credit Suisse upgraded Total SA (NYSE: TOT) to Outperform from Neutral based on valuation and expectations for a return in upstream volume growth in 2008.
Credit Suisse also upgraded Research in Motion (NASDAQ: RIMM) to Outperform from Neutral, citing RIMM's expanding international market share.
MasterCard (NYSE: MA) was raised to Buy from Hold at Deutsche Bank, as they believe the company's margin potential is yet to be fully priced into shares or Street estimates.
Citigroup raised shares of Sun Microsystems (NASDAQ: JAVA) to Buy from Hold to reflect the company's improving product line, restructuring, and share buyback. They find the risk/reward attractive and expect solid Q2 results.
OTHER UPGRADES:
Goldman added Oracle (NASDAQ: ORCL) to its Conviction Buy List.
BorgWarner (NYSE: BWA) to give business update at 10am.
Burger King (NYSE: BKC) to report Q1 earnings; conference call at 10am.
Tuesday, November 6
Merrill Lynch to host conference call discussing Focus Media's (NASDAQ: FMCN) secondary offering at 11am.
Yahoo (NASDAQ: YHOO) CEO Jerry Yang, Senior VP Michael Callahan & General Counsel to testify before the House Foreign Affairs Committee on how their company gave false information to Congress relating to their role in a human rights case in China which resulted in a journalist being sent to jail for 10 years.
MOST NOTEWORTHY: American Eagle, CVS/Caremark, Office Depot, WPP Group and Pixelworks were today's noteworthy upgrades:
American Eagle Outfitters Inc (NYSE: AEO) was upgraded to Outperform from Market Perform at Wachovia, as the firm believes momentum from a strong Spring/Summer can carry into the fall/Holiday seasons.
JP Morgan views CVS/Caremark Corporation (NYSE: CVS) as the most sophisticated healthcare offering, the largest PBM, and has first mover advantage. The firm upgraded shares to Overweight from Neutral.
JP Morgan also upgraded shares of Office Depot Inc (NYSE: ODP) to Overweight from Neutral based on valuation and potential turnaround.
Morgan Stanley upgraded WPP Group (NASDAQ: WPPGY) to Overweight from Equal Weight as they believe the company can still meet its profit forecasts and margin goals in a slowing global economy.
Jefferies upgraded shares of Pixelworks Inc (NASDAQ: PXLW) to Hold from Underperform on valuation as they no longer believe the risk/reward favors shorting at these levels.
MOST NOTEWORTHY: Sunoco, Primedia, WPP Group, Publicis and Newfield Exploration were today's noteworthy downgrades:
Sunco Inc (NYSE: SUN) was downgraded to Neutral from Buy at Banc of America, as the firm believes Sunoco's valuation discount is justified since its net margin/barrel is almost $2.50 below its closest peer due to inferior assets.
Deutsche Bank downgraded shares of Primedia Inc (NYSE: PRM) to Hold from Buy on valuation.
Citigroup downgraded shares of WPP Group (NASDAQ: WPPGY) to Hold from Buy and shares of Publicis Groupe (NYSE: PUB) to Sell from Hold to reflect their more cautious view of the advertising sector.
On tonight's MAD MONEY on CNBC, Jim Cramer said it is time to start nibbling into retail stocks after he's been negative for a while. He thinks the Fed will start cutting rates soon and not everyone has realized they have bottomed out. The ultimate turnaround stock in the sector will be Gap Inc. (NYSE: GPS) because of the new management team. He is very particular here to only ease into the stock. He also likes Kohl's Corp. (NYSE: KSS) because it is down 20% and has a major growth vehicle. American Eagle Outfitters (NYSE: AEO) is one that has insiders buying stock.
These 3 picks are interesting picks, although Gap seems to be mauled every month in crummy stores and won't be able to fix itself fast. maybe that huge stock buyback can help it. This one may only have the "less bad is good" future, because its shoppers have abandoned it. It's too hard to love the Gap and in a private equity absent market the hopes for a buyout seem a bit childish. Kohl's and American Eagle are both in a spot that could generate serious returns if these go back to their prior highs. American Eagle at $25.00+ would generate close to a 40% gain if it goes back to a year high of $34.80, and Kohl's at $57.00+ would also show close to a 40% gain for it to hit $79.55.
It is far too easy to call for the death of the consumer because you'd have to say "But, this time the consumer really will be dead." Rumors of the death of the consumer seem to ALWAYS be exaggerated time after time. The safest bet here for the whole retail sector is perhaps the Merrill Lynch Retail HOLDRs, although you should realize that the big box retail plays dominate this and smaller clothing retail plays are not represented well at all in this one. The other targeted ETF for the group is PowerShares Dynamic Retail. That one does have this specific clothing retail mixed into more of a broad pool. It is just less liquid.
Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.
MOST NOTEWORTHY: Take-Two Interactive Software (TTWO), Greenbrier Cos (GBX), DirecTV Group (DTV), General Motors (GM) and Ford (F) were today's noteworthy upgrades:
Soleil upgraded shares of Take-Two Interactive Software (NASDAQ: TTWO) to Buy from Hold as they believe the new management team has quickly taken multiple steps to address key issues and is refocusing on profitable growth.
Morgan Keegan raised Greenbrier Cos (NYSE: GBX) to Market Perform from Underperform following the company's Q3 report.
Citigroup upgraded shares of DirecTV Group Inc (NYSE: DTV) to Buy from Hold as they see a 75% chance that Liberty Media (LCAPA) tenders for DTV within the next 12 months and could offer $30 a share for the company.
JP Morgan upgraded General Motors Corp (NYSE: GM) to Overweight from Neutral with a $50 target and Ford Motor Co (NYSE: F) to Overweight from Underweight as they see signs that unions will engage in radical changes, which could bring EPS upside. General Motors was also added to JP Morgan's Focus List...
MOST NOTEWORTHY: Microsoft (MSFT), Sony Corp (SNE), Adobe Systems Inc (ADBE) and the cable sector were today's noteworthy upgrades:
DA Davidson upgraded Microsoft Corp (NASDAQ: MSFT) to Buy from Neutral, as the firm is no longer concerned the tech giant will acquire Yahoo! (YHOO) following the recent acquisition of aQuantive, Inc (AQNT).
HSBC upgraded shares of Sony Corp (NYSE: SNE) to Overweight from Neutral to reflect improving profitability at Sony's electronics business.
Pacific Crest upgraded Adobe Systems (NASDAQ: ADBE) to Outperform from Sector Perform to reflect the strong CS3 outlook and growth in new areas such as mobile.
Citigroup upgraded their cable sector view as they continue believe cap ex will remain at elevated levels at a time when the marginal cable investor is likely more willing to forego near-term FCF growth to achieve robust EBITDA growth. Along with the raised sector view, Citigroup upgraded Time Warner Cable (NYSE: TWC) and Comcast Corp (NASDAQ: CMCSA) to Buy from Hold. The firm believes investors can benefit from owning both EchoStar Communications (DISH) and cable equities...
OTHER UPGRADES:
Bear Stearns upgraded Tiffany & Co (NYSE: TIF) to Outperform from Peer Perform.
MOST NOTEWORTHY: The electronics manufacturing services sector was today's noteworthy initiation:
Credit Suisse initiated coverage of the EMS sector with an Underweight. The firm believes the industry is burdened with overcapacity in high-cost manufacturing regions, with hyper competition, allowing for no pricing power.
MOST NOTEWORTHY: Applied Materials (AMAT), Southern Union (SUG), Alcatel-Lucent (ALU), Lamar (LAMR) and Trump Entertainment (TRMP) led the noteworthy upgrade list today:
UBS upgraded shares of Applied Materials (NASDAQ: AMAT) to Buy from Neutral as they expect the company to benefit from increased capital spending by Rexchip, the joint venture of Elpida and Powerchip. After speaking to contacts, UBS believes shipments to Rexchip will total around $640M in 2007.
Southern Union (NYSE: SUG) was upgraded to Overweight from Neutral at JP Morgan.
Credit Suisse upgraded shares of Alcatel-Lucent (NYSE: ALU) to Outperform from Neutral on improved earnings visibility and the potential for incremental cost savings.
SMH Capital upgraded shares of Lamar Advertising (NASDAQ: LAMR) to Buy from Neutral after the conference call indicated the run rate for digital deployment is increasing, while capex per board is declining. The firm thinks the Street may be overlooking the potential for significant earnings acceleration into 2008.
Nollenberger upgraded shares of Trump Entertainment Resorts (NASDAQ: TRMP) to Neutral from Sell based on valuation and believes fair value is $14/share...
MOST NOTEWORTHY: Newmont Mining Corp (NEM), Qwest Communications International Inc (Q), Sirius Satellite Radio Inc (SIRI), Chipotle Mexican Grill, Inc (CMG) and American Eagle Outfitters (AEO) were today's noteworthy upgrades:
Prudential upgraded shares of Newmont Mining Corp (NYSE: NEM) to Neutral from Underweight citing valuation, higher gold and copper prices and specific mine factors that should lead to an operational turnaround.
Credit Suisse raised shares of Qwest Communications International Inc (NYSE: Q) to Neutral from Underperform as the firm believes management is less likely to engage in a fiber video build and cites the increase in the company's NOL carry-forwards.
Sirius Satellite Radio (NASDAQ: SIRI) was upgraded to Outperform from Market Perform at Barrington Research.
Raymond James upgraded Chipotle Mexican Grill (NYSE: CMG) to Outperform from Market Perform. Morgan Keegan also raised shares to Outperform from Market Perform, citing better-than-projected operating fundamentals and growth prospects.
American Eagle Outfitters (NYSE: AEO) was upgraded to Strong Buy from Buy at Matrix USA to reflect the company's impressive SSS growth...
OTHER UPGRADES:
Arris Group, Inc (NASDAQ: ARRS) was upgraded to Sector Performer from Underperformer.
American Eagle (NYSE: AEO) closed at $7.52 Friday. AEO is scheduled to report Q3 EPS on November 25. RBC Capital Markets lowered its price target to $14 from $15. AEO December option implied volatility of 120 is above its 26-week average of 74 according to Track Data, suggesting larger price movement. 
Some of the country's largest retail chains had good June sales, benefitting from consumers looking for a place to spend their tax rebates, but this was not the case for higher-priced department stores. Retailers offering big discounts were among the privileges ones as consumers chose to stay away from high prices.
.gif){kind=logo}
.gif){kind=logo}
.gif){kind=logo}
.gif){kind=logo}
Big 3 CEOs drive to Washington to suck up to Congress
GM and Ford ready weak pitches for taxpayer bucks
Cramer on BloggingStocks: A troika of opportunity and trouble 
