Analyst Upgrades

• Canaccord upgraded BHP Billiton (BHP) to buy from hold. The firm expects BHP Billiton to emerge from the downturn with better operating margins and less dependence on an economic recovery. The firm also upgraded Rio Tinto (RTP) to buy from neutral but expects BHP Billiton to outperform near-term.
• Keefe Bruyette upgraded Raymond James (RJF) to market perform from underperform after raising estimates to reflect higher revenues and lower loan loss provisioning. Despite the upgrade, the firm remains cautious on the stock.
• Goldman upgraded InterActiveCorp (IACI) to buy from neutral. The firm upgraded shares based on improved momentum for its Search and ServiceMagic units and its belief that Ask.com may be an acquisition target. The firm believes Microsoft (MSFT) could be a logical acquirer for the unit once it receives approval for the Yahoo! (YHOO) partnership.
• Baidu.com (BIDU) was raised to buy from hold at Deutsche Bank.
• Symantec (SYMC) was upgraded to outperform from market perform at Wells Fargo.
• Brookdale Senior Living (BKD) was upgraded to equal weight from underweight at Barclays.

Was today about stocks, or was it about the FOMC starting its 2-day meeting? Or was it about mergers or a huge Indian gold purchase? Markets were mixed late in the day after having been in negative territory earlier.

Here were today's unofficial closing bell levels:


Dow 9,771.91 -17.53 (-0.18%)
S&P 500 1,045.41 +2.53 (0.24%)
Nasdaq 2,057.32 +8.12 (0.40%)

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TheStreet.com's Jim Cramer says opportunistic mergers help deliver value to shareholders during difficult times.

The companies aren't oblivious to this difficult environment. It isn't just that they look at the futures and say, "Uh oh, here comes another bad one" -- the reaction we all feel today. No, it doesn't work like that. They realize that growth's been lowered worldwide and that they can't do it on their own because they don't have critical mass and they have to give up and get together with others in their industries to bring out value.

Black & Decker (NYSE: BDK) (Cramer's Take) and Encore (NYSE: EAC) (Cramer's Take) came to this exact same conclusion at the same time. They just can't make more money for their shareholders independently than they can with other partners. With Encore settling for Denbury's (NYSE: DNR) (Cramer's Take) bid and Black & Decker agreeing to be acquired by Stanley Works (NYSE: SWK) (Cramer's Take), both are settling for about half of what their companies were worth two years ago. But the world has changed in two years, and a lot of the rosy scenarios that justified being independent have to be reconsidered.

As expected, Black & Decker Corporation's (NYSE: BDK) stock is recovering ahead of the U.S. housing sector's better days, which is why I'm Reiterating my Buy rating for the company's shares, first recommended on April 17, 2009 at a price of $33.53. If you bought BDK in April, you're up about 42%.

Look for a 4-7% revenue increase for BDK in FY2010, and an 8-10% gain in FY2011, mostly on the U.S. housing sector's stabilization, which will boost the company's power tools and home improvement segments. In this case, 'less bad is good enough' for Wall Street: only mild housing sector growth is forecast, but given the housing sector's three-year swoon, it will look like a day at the beach.

Today was an odd day considering that the bond traders were out and banks were closed for Columbus Day. There were gains most of the day ahead of earnings season, but we came down substantially off the highs. It still feels like the DJIA will crack 10,000, but the trading is getting choppy as we enter what may be the biggest earnings season in a couple years for growth investors.

Here are today's unofficial closing bell levels:

Dow 9,885.80 +20.86 (0.21%)
S&P 500 1,076.18 +4.69 (0.44%)
Nasdaq 2,139.14 -0.14 (-0.01%)

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Analyst upgrades:

• Citigroup upgraded Polaris Industries (NYSE: PII) to Buy from Hold after channel checks indicated the company's sales trends improved through September. The firm raised its target on shares to $49 from $33.
• Jefferies upgraded Citrix Systems (NASDAQ: CTXS) to Hold from Underperform after channel checks indicated IT spending will be strong in the second half of 2009, but the firm finds the stock fully valued at current levels. Jefferies raised its target on shares to $40 from $32.
• Pali Captital upgraded Abercrombie & Fitch (NYSE: ANF) to Buy from Neutral on valuation and expectations that lower pricing and international growth will be catalysts going forward. The firm set a $45 price target on shares.
• Plum Creek Timber (NYSE: PCL) was upgraded to Neutral from Underweight at JPMorgan.
• Advanced Micro (NYSE: AMD) was upgraded to Buy from Neutral at UBS.
• PPD Inc. (NASDAQ: PPDI) was upgraded to Outperform from Neutral at Baird.

TheStreet.com's Jim Cramer says stocks connected to the sector will take it on the chin if the housing index falls further.

A perusal of the charts this weekend shows something surprising: The weakest group out there has been the homebuilders for several weeks now. KB Home (NYSE: KBH) (Cramer's Take), D.R. Horton (NYSE: DHI) (Cramer's Take), Lennar (NYSE: LEN) (Cramer's Take), and Toll Brothers (NYSE: TOL) (Cramer's Take) have simply been a horror show. What's going on here? How can these stocks be so dangerous when mortgage rates have crashed through 5%, the level that every banker I talk to says mortgages jump off the table and refinancings rush to be done.

What's going on? This group's tracking more than just mortgage rates. It's tracking employment and news flow and both are terrible.

Analyst upgrades:

• Citigroup upgraded Nucor (NYSE: NUE) to Buy from Hold to reflect its positive outlook for steel and expectations the company will return to profitability in Q4. Citi raised its target price on shares to $57 from $46.
• Oppenheimer upgraded Given Imaging (NASDAQ: GIVN) to Outperform from Perform to reflect solid PillCam Colon data and expected margin improvement. The firm has a $25 target on shares.
• Deutsche Bank upgraded Genworth (NYSE: GNW) to Buy from Hold following the $600M capital raise as it believes liquidity at the holding company has improved. The firm raised its target on shares to $18 from $7.
• Washington Federal (NASDAQ: WFSL) was upgraded to Outperform from Underperform at FBR Capital.
• Carnival (NYSE: CCL) was upgraded to Sell from Conviction Sell at Goldman.
• Anadarko Petroleum (NYSE: APC) was upgraded to Buy from Hold at Weeden.

TheStreet.com's Jim Cramer says don't heed the pundits -- allow yourself to believe things are improving.

Skeptical, or impossible? That's how I am posing the dilemma of the "pull through" argument whether it involves Ford (NYSE: F) (Cramer's Take) and "Cash for Clunkers" or Hovnanian (NYSE: HOV) (Cramer's Take), Lennar (NYSE: LEN) (Cramer's Take), Toll (NYSE: TOL) (Cramer's Take), KB Home (NYSE: KBH) and Pulte (NYSE: PHM) (Cramer's Take) and the $8,000 tax credit.

Right now any time there is a stimulus program of any sort, the pundits/media/money managers all decide the most important single issue isn't what it will do to the numbers, or whether it will work at all, but what will it do to the "pull through." How much of future sales will it "steal"?

Analyst Upgrades

• Citigroup upgraded Deutsche Bank (NYSE: DB) to Hold from Sell citing reduced legacy risks and strength in the fixed income franchise.
• Janney Montgomery upgraded Fuel Systems (NASDAQ: FSYS) to Buy from Neutral based on valuation, the OEM market in Europe for alternative transportation is growing faster than expected, and the $30M equity raise was smaller than expected.
• Freeport McMoRan (NYSE: FCX) was upgraded to Outperform from Market Perform by FBR Capital. The firm believes that the company will benefit from copper supply issues over the long term, and it thinks the stock has reached an attractive entry point.
• Black & Decker (NYSE: BDK) was upgraded to Neutral from Underperform at Credit Suisse.
• American Tower (NYSE: AMT) was raised to Overweight from Neutral at JPMorgan.
• EMC Corp. (NYSE: EMC) was upgraded at Barclays to Overweight from Equal Weight.

TheStreet.com's Jim Cramer says it's hard not to capitulate when your clients demand irrationality.

When I was weighted short and we would have these seemingly endless days of rallying, it was the mornings that would get me. The mark-ups of the futures, the refusal of Asia or Europe to go down, the "tone." It was relentless.

Then I would get to the office and, after a long period in which all I heard were downgrades, I would be greeted by upgrades, where I would always scream, "Now? Now they upgrade Intel (NASDAQ: INTC) (Cramer's Take)?" Or, "He's putting Research In Motion (NASDAQ: RIMM) (Cramer's Take) on the list now, after this run?" Or, "Wells Fargo (NYSE: WFC) (Cramer's Take) goes from hold to buy? After it ran up 4 points? What is he thinking?"

It goes without saying that this market remains a market for the bold only. There are some 'greens shoots' sprouting in the economy, to cite a phrase popularized by Fed Chairman Ben Bernanke, but there still are formidable problems.

That said, no one ever made a dime by establishing stock positions when things were 99% safe: by that time, almost every stock has been bid-up. You have to prudently-bottom fish, and with this in mind, Black & Decker (NYSE: BDK) is worth a review.

• Citigroup upgraded Abbott Lab (NYSE: ABT) to Hold from Sell on valuation following the stock's recent underperformance. The firm maintains a $48 price target.
  
• Deutsche Bank upgraded shares of Pepsi Bottling (NYSE: PBG) and Dr. Pepper Snapple (NYSE: DPS) to Buy from Hold as they believe carbonated soft drinks market is showing signs of stabilization. The firm raised its price target on Pepsi Bottling to $28 from $25 and on Dr. Pepper Snapple to $22 from $20.
  
• Baird upgraded CommScope (NYSE: CTV) to Outperform from Neutral and raised their target to $19 from $10 as they expect fundamentals to bottom in Q1 and ramp strongly in Q2 as wireless capex outlook improves.
• Sinopec Shanghai (NYSE: SHI) was raised to Buy from Sell at Goldman.
  
• TRW Automotive (NYSE: TRW) was upgraded at JP Morgan to Neutral from Underweight.

TheStreet.com's Jim Cramer says stocks are headed lower, perhaps much lower, even if the banks receive the help they need.

You can see it dawn on people one by one. We aren't coming out of this morass, we are just going into it. The president and Congress aren't serious about it. But more importantly, somehow, the companies are stunned by it.

If you want to read about what it is like to recognize that things are falling apart, go read the Textron (NYSE: TXT) (Cramer's Take) quarter. They actually thought there would be some improvement at year-end. That's not going to happen to a Cessna manufacturer with a commercial finance division of dubious worth. Perhaps there was some hyperbole, but Textron said it was the worst manufacturing time ever!

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Altria Group Inc. (NYSE: MO) Q4 profit rose on higher prices, and its forecast matched expectations.
• Amgen Inc. (NASDAQ: AMGN) Q4 earnings grew on cost cutting but revenue remained flat.
• Black & Decker Corp. (NYSE: BDK) shares tanked after the dismal Q4 report, and it announced job cuts.
• Carpenter Technology Corp. (NYSE: CRS) Q2 numbers resulted in a downgrade from one analyst.
• ConocoPhillips (NYSE: COP) reported a Q4 loss due to writedowns from recent acquisitions.
• DuPont (NYSE: DD) swung to a bigger-than-expected Q4 loss and its revenue fell as well.
• Eli Lilly & Co. (NYSE: LLY) swung to a Q4 loss on acquisition costs but reaffirmed its guidance.