MOST NOTEWORTHY: European banks, the Paper and Forest Products sector, Kindred Healthcare and Convergys were today's noteworthy upgrades:

• Keefe Bruyette upgraded the European Banks sector to Neutral from Underweight on valuation as they see limited downside from current levels. Included in the firm's top picks are HSBC Holdings Plc (NYSE: HBC) and Banco Santander SA (NYSE: STD).
• Credit Suisse upgraded the Paper and Forest Products sector to Overweight from Underweight citing valuations and expectations that fundamentals will bottom this fall. The firm raised shares of Temple-Inland Inc (NYSE: TIN) and Smurfit-Stone Container Corporation (NASDAQ: SSCC) to Outperform from Neutral.
• Friedman Billings upgraded shares of Kindred Healthcare Inc (NYSE: KND) to Outperform from Market Perform on valuation following the recent pullback and believes the company is well-positioned to beat modest expectations over the remainder of the year. The firm raised their target to $36 from $29.
• Oppenheimer raised Convergys Corporation (NYSE: CVG) to Outperform from Perform on valuation, as they believe investors should look at the company's business lines separately. Their sum of parts valuation yields an $18 target.

OTHER UPGRADES:

• Suncor Energy Inc (NYSE: SU) was upgraded to Overweight from Neutral at JP Morgan and to Outperform from Market Perform at Friedman Billings.
• UBS upgraded BT Group Plc (NYSE: BT) to Neutral from Sell.
• Broadcom Corporation (NASDAQ: BRCM) was upgraded to Buy from Neutral at Piper.

Back in October 2004, PeopleSupport Inc. (NASDAQ: PSPT) went public at $7 per share (the offering was fairly lackluster as the stock price fell on its first day of trading).

Well, now the company may no longer be public. That is, on Friday, PeopleSupport announced that it got a $15 per share buyout offer from IPVG and AO Capital Partners.

PeopleSupport provides offshore business process outsourcing services -- such as for customer management and transcription. The company operates in the Philippines, Costa Rica, and the United States.

However, the stock price plunged 38% in March because of a weak quarterly report. No doubt, the company faces intense competition from players like IBM (NYSE: IBM), Convergys, and eTelecare. Thus, it's likely we'll see consolidation in the space.

Interestingly enough, BloggingStocks had a piece -- a day before the buyout announcement --t hat showed that PeopleSupport had a "bullish 'flag'" pattern on its stock chart.

Yes, it certainly did.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

MOST NOTEWORTHY: DaimlerChrysler (DCX), Omniture (OMTR), Convergys (CVG), Expedia (EXPE) and Baidu.com (BIDU) were today's noteworthy upgrades:

• WestLB upgraded shares of DaimlerChrysler (NYSE: DCX) to Buy from Add after the company raised the profit margin forecast for its Mercedes unit.

• Omniture (NASDAQ: OMTR) was upgraded by Piper Jaffray to Market Perform from Underperform to reflect the company's strong revenue momentum and expanding margins.

• Wedbush upgraded Convergys (NYSE: CVG) to Hold from Sell on valuation.

• Citigroup raised shares of Expedia (NASDAQ: EXPE) and Baidu.com (NASDAQ: BIDU) to Buy from Hold on valuation...

OTHER UPGRADES:

• Bear Stearns upgraded shares of Ryder System (NYSE: R) to Outperform from Underperform.

• Lehman raised EnCana Corp (NYSE: ECA) to Equal Weight from Underweight.

• USG Corp (NYSE: USG) was raised to Neutral from Underperform at Buckingham.

• Morgan Keegan upgraded shares of Panera Bread (NASDAQ: PNRA) to Outperform from Market Perform.

• Citigroup raised Cullen/Frost Bankers (NYSE: CFR) to Hold from Sell.

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

MOST NOTEWORTHY: WCI Communications Inc (WCI) and L-1 Identity Solutions Inc (ID) topped today's list of downgrades:

• JMP Securities downgraded shares of WCI Communications Inc (NYSE: WCI) to Underperform from Market Perform to reflect the negative Q4 pre-announcement and lower-than-expected traditional home net orders.

• L-1 Identity Solutions Inc (NYSE: ID) was downgraded to Sell from Neutral at Oppenheimer, noting that the Transportation Security Administration is prepared to award the Transportation Worker Identification Card contract to Lockheed instead of L-1.

OTHER DOWNGRADES:

• General Dynamics Corp (NYSE: GD) was downgraded to Hold from Buy by AG Edwards, citing valuation.

• Matrix USA downgraded Microtune Inc (NASDAQ: TUNE) to Strong Sell from Sell on valuation.

• Convergys Corp (NYSE: CVG) was downgraded to Sell from Hold, with a $22 target, based on valuation.

• BancFirst Corp (NASDAQ: BANF) was downgraded to Underperform from Market Perform, with a $45 target, at Keefe Bruyette following the disappointing Q4 report.

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

Traditionally, private equity firms have focused on brick-and-mortar companies. The targets are often underperforming – yet have strong cash flows and stable contracts.

But, recently, private equity firms have moved to tech companies. And some of the deals have been huge, such as the $17.6 billion buyout of Freescale Semiconductor, Inc. (NYSE:FSL) and the $11.4 billion Sungard buyout.

So, is this the beginning of a major trend?

The answer is "no" from a top credit analysis firm, Fitch Ratings.

Why?

First, tech companies are not ideal for loading-up the balance sheet with debt. That is, the free cash flow tends to be too low – or too erratic. Besides, there is "technology risk," in which a company's products can become obsolete from intense competitive forces.

Next, because of the dot-com implosion, many tech companies have already restructured operations. In other words, there is little opportunity for improvement that a private equity can provide.

Despite all this, Fitch did find a few attractive candidates for buyouts: CA, Inc. (NYSE:CA), Convergys Corporation (NYSE:CVG) and even Dell Inc. (NASDAQ:DELL).

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Financial Statements.