Analyst upgrades:

• Goldman upgraded General Electric (NYSE: GE) to Buy from Neutral and raised its target to $15 from $13 citing reports that U.S. House Financial Services Chairman Barney Frank has indicated regulatory reform will not require a separation of GE Capital.
• Syntel (NASDAQ: SYNT) was upgraded to Market Perform from Underperform by Wells Fargo. The firm upgraded the stock following the company's much better than expected Q2 EPS.
• Canaccord upgraded USANA (NASDAQ: USNA) to Outperform from Market Perform citing the strong Q2 report and earnings momentum. The firm has a $40 target on the stock.
• Royal Caribbean (NYSE: RCL) was upgraded to Equal Weight from Underweight at Barclays.
• Equity Residential (NYSE: EQR) was upgraded to Market Perform from Underperform at FBR Capital.
• Tyco Electronics (NYSE: TEL) was upgraded to Buy from Neutral at UBS.
• Yum! Brands (NYSE: YUM) was upgraded to Overweight from Equal Weight at Morgan Stanley.

Analyst Upgrades

• Barclays upgraded Anglo American (NASDAQ: AAUK) to Overweight from Equal Weight based on a potentially higher bid from Xstrata (OTC: XSRAY) or a white night willing to pay a premium for the group, higher copper prices, and improving operating performance.
• Janney Montgomery upgraded Chiquita Brands (NYSE: CQB) to Buy from Neutral citing improved bagged salad margins, strong free cash flow, solid banana trends, and valuation. The firm has a $13 target on the stock.
• Wunderlich upgraded Legacy Reserves (NASDAQ: LGCY) to Buy from Hold due to the firm's belief that the back of the crude board is still very cheap, the firm's increased distribution outlook, and the movement of the stock after the discontinuation of the company's talks with Apollo.
• Deutsche Bank (NYSE: DB) was upgraded to Buy from Neutral at UBS.
• UBS (NYSE: UBS) was upgraded to Outperform from Neutral at Credit Suisse.
• Illinois Tool Works (NYSE: ITW) was upgraded to Outperform from Market Perform at Wachovia.

Analyst upgrades:

• Cowen upgraded Aaron Rents (NYSE: RNT) to Outperform from Neutral and believes the company's business model is gaining momentum despite the difficult environment. The firm views valuation as attractive.
  
• Citigroup upgraded shares of MedCath (NASDAQ: MDTH) to Hold from Sell on valuation following the recent sell-off. The company's target was lowered to $9 from $19.
  
• Stanford upgraded AeroVironment (NASDAQ: AVAV) to Buy from Hold based on valuation and because they believe its visibility over the next year has improved.
• Chiquita Brands (NYSE: CQB) was lifted to Buy from Hold at BB&T.
  
• Chico's FAS (NYSE: CHS) was upgraded to Neutral from Sell at UBS.
  
• FCStone (NASDAQ: FCSX) was raised to Strong Buy from Outperform at Raymond James.

Analyst downgrades:

• RBC Capital downgraded Clearwire (NASDAQ: CLWR) to Sector Perform from Outperform based on reduced valuation parameters and lack of catalysts. The company's target was lowered to $9 from $15.
• Kellogg (NYSE: K) and Coca-Cola (NYSE: KO) were cut to Neutral from Buy at UBS.
  
• Evergreen Solar (NASDAQ: ESLR) was downgraded at JP Morgan to Underweight from Neutral.
• Deutsche Telekom (NYSE: DT) was downgraded to Neutral from Buy at Goldman and to Hold from Buy at Deutsche Bank.

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

• CarMax Inc. (NYSE: KMX) Q1 profits tumbled despite its aggressive expansion program.
• Chiquita Brands International Inc. (NYSE: CQB) warned it would miss earnings due to cost hikes.
• Circuit City Stores Inc. (NYSE: CC) Q1 loss widened as same-store sales dwindled.
• Commercial Metals Co. (NYSE: CMC) Q3 profits declined despite strong demand, but beat estimates.
• Coventry Healthcare Inc. (NYSE: CVH) lowered its Q2 and full-year outlooks after a disappointing April.
• FedEx Corp. (NYSE: FDX) missed estimates on higher fuel prices and offered lackluster guidance.
• Ford Motor Co. (NYSE: F) warned that 2008 full-year results would be worse than those of 2007.
• General Electric Co. (NYSE: GE) was downgraded by JP Morgan because of risk to earnings.
• J.M. Smucker Co. (NYSE: SJM) missed Q4 earnings expectations despite acquisitions-based growth.
• La-Z-Boy Inc. (NYSE: LZB) said it swung to a Q4 loss due to diminishing retail sales.
• Lehman Brothers Holdings Inc. (NYSE: LEH) CEO expressed his disappointment in the Q2 results.
• Merrill Lynch & Co. (NYSE: MER) profit warnings and write-downs hit the rumor mill.
• Morgan Stanley (NYSE: MS) beat low expectations despite a hefty decline in Q2 profits (see transcript).
• Pier 1 Imports Inc. (NYSE: PIR) narrowed its Q1 loss but still fell short of expectations.
• Winnebago Industries Inc. (NYSE: WGO) posted dismal Q3 results but still beat low expectations.

More earnings highlights from this week: Goldman Sachs, Best Buy, General Mills, Carnival and others

Chiquita Brands (NYSE: CQB) is recently down $6.71 to $16.58 after announcing it expects to report a Q3 loss on higher industry costs. Wachovia has an Outperform rating on CQB. CQB August 17 puts have traded 83 times on transaction volume of 1,718 contracts compared to its open interest of 1,312 contracts. CQB August option implied volatility of 68 is above its 26-week avearge of 54 according to Track Data, suggesting larger price movement.

Fresh Del Monte (NYSE: FDP) is recently down $6.56 to $25.32 in sympathy with CQB announcing a Q3 loss on higher industry costs. FDP July option implied volatility of 65 is above its 26-week average of 49, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

MOST NOTEWORTHY: McGraw-Hill, Curis and Azure Dynamics were today's noteworthy initiations:

• Jefferies initiated McGraw-Hill (NYSE: MHP) with a Buy rating and $49 target. The firm believes the downturn in credit markets has already been fully priced into shares and expects the stock to gain momentum throughout 2008 in anticipation of liquidity returning to credit markets.
  
• RBC Capital initiated Curis (NASDAQ: CRIS) with an Outperform rating and $2.50 target based on the company's partnership with Genentech (NYSE: DNA) and potential upside from its pipeline.
  
• Merriman started Azure Dynamics (OTC: AZDDF) with a Buy rating. The firm believes the company's focus is where customers see the most benefit from a medium-duty hybrid or market-appropriate solutions and finds the stock attractively valued.

OTHER INITIATIONS:

• Dr. Pepper Snapple (NYSE: DPS) was assumed with a Market Perform rating at Wachovia.
  
• Morgan Stanley started Chiquita Brands (NYSE: CQB) with an Equal Weight rating.
  
• Credit Suisse initiated Iron Mountain (NYSE: IRM) with a Neutral rating and $34 target.

MOST NOTEWORTHY: Rudolph Technologies, Inc (RTEC), DirecTV Group, Inc (DTV), EchoStar Communications (DISH) and Legacy Reserves LP (LGCY) were today's more noteworthy initiations:

• AG Edwards started Rudolph Technologies, Inc (NASDAQ: RTEC) with a Buy rating, believing Rudolph's acquisition of August Technologies created additional market opportunities and recommends investors to build positions at these levels to participate in future growth.

• Stifel initiated DirecTV Group, Inc (NYSE: DTV) with a Buy rating and $28 target and EchoStar Communications (NASDAQ: DISH) with a Hold rating and $45 target. The firm prefers DirectTV to EchoStar given DirectTV's faster growing Latin America division, coming HD advantage, and greater likelihood of buybacks and views a merger between DISH & DTV as possible longer-term.

• Legacy Reserves (NASDAQ: LGCY) was started with a Buy rating at Oppenheimer, expecting Legacy to grow through acquisitions.
  

OTHER INITIATIONS:

• CIBC initiated FTI Consulting, Inc (NYSE: FCN) and Advisory Board Co (NASDAQ: ABCO) with Sector Outperformer ratings, and a $45 target and $62 target, respectively, and Resources Connection, Inc (NASDAQ: RECN) and Corporate Executive Board Co (NASDAQ: EXBD) with Sector Performer ratings.

• Chiquita Brands International, Inc (NYSE: CQB) was initiated with a Buy rating at Morgan Joseph.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Banana company Chiquita Brands International Inc. (NYSE:CQB) settled its suit with the U.S. Justice Department. Chiquita agreed to pay a $25 million fine for aiding and abetting terrorists in Colombia. The DOJ alleges that Chiquita paid $1.7 million over a 7 year period, 1997-2004, to the right-wing United Self-Defense Forces as well as to the left-wing Revolutionary Armed Forces to protect Chiquita operations and employees. Chiquita executives said that the payments were to ensure the safety of its workforce and were not meant to take sides in Colombia's civil conflict nor support Colombia's cocaine trade. Unable to secure its operations in Colombia despite paying off both sides, Chiquita sold its Colombian operations in June 2004. It is worth asking where all the U.S. aid to Colombia went and why none of it seems to have been used to protect American commercial interests in Colombia. Perhaps its easier to fault the company rather than U.S. policy.

But being accused of consorting with terrorists was not the only bad news for Chiquita. 2006 was a bad year for bananas. In recently released fourth-quarter 2006 earnings, Chiquita experienced a 4% growth in its "European banana regime," despite no one knowing quite what that phrase means. Net sales were up 9% to $1.1 billion, yet the company suffered an operating loss of $34 million, including the $25 million set aside to pay the fine. Banana sales were up 11% to $495 million, but nonetheless showed an oeprating loss of $26 million for Q4 2006. Fresh Cut packaged salad sales were flat at $256 million, but showed a $9 million operating loss over consumer concerns about tainted spinach. Not a good year!