Analyst Upgrades

• Citigroup (C) to outperform from market perform at Bernstein.
• Cubist Pharma (CBST) to outperform from neutral at RW Baird.
• Pentair (PNR) to buy from hold at Citigroup.
• Heritage Financial (HFWA) to outperform from market perform at Keefe Bruyette.
• SL Green Realty (SLG) and Digital Realty (DLR) to market perform from underperform at FBR Capital.
• MGM Resorts (MGM) to neutral from Sell at Janney Capital.
• Ciena (CIEN) to buy from neutral and Olin (OLN) to buy from underperform at BofA/Merrill.
• Mellanox (MLNX) to overweight from equal weight at Barclays.
• ConocoPhillips (COP) and Canadian Natural (CNQ) to overweight from neutral at JPMorgan.
• IDEX (IEX) to outperform from perform at Oppenheimer.
• Taiwan Semiconductor (TSM) to buy from hold at Deutsche Bank.
• Ctrip.com (CTRP) to positive from neutral at Susquehanna.
• Linear Technology (LLTC) and Analog Devices (ADI) to hold from sell at Auriga.
• Quicksilver (KWK) to outperform from market perform at BMO Capital.

"The Chinese people's growing appetite for travel is a big story and it has put two Chinese stocks into our current list of our top ten stock ideas," says technical and fundamental stock expert Mike Cintolo. In his The Cabot Top Ten Report, he takes a look at Home Inns (HMIN) and Ctrip.com (CTRP).

Cintolo explains, "Ctrip.com is la Chinese online search engine that has taken a U.S. Web business (in this case Expedia) and translated it to suit Chinese tastes.

"The company started by aggregating hotel vacancies and offering them online at a discount. Now, Ctrip.com has broadened its offerings to include airline tickets and packaged tours inside China.

Shares of Ctrip.com International, Ltd. (NASDAQ: CTRP) dropped into negative territory right out of the gate this morning, thanks to some skeptical analyst commentary. The Shanghai-based travel firm is slated to report its second-quarter earnings after the closing bell tonight, and Piper Jaffray analyst Michael J. Olson warned in a client note that he expects CTRP's results to fall short of consensus estimates.

Olson, who maintains a "neutral" rating on CTRP, cited the severe earthquake that hit western China in May as a key fundamental challenge for the company. He noted a 1% year-over-year decline in Chinese air traffic during the second quarter, observing, "This is the first time since the SARS issue in 2003 that China Airline traffic data has turned negative." He also expects that Ctrip's third-quarter outlook will disappoint the Street, due to travel restrictions related to the Olympic Games in Beijing.

Ahead of tonight's second-quarter release, analysts surveyed by Thomson Reuters are expecting Ctrip.com to report a profit of 20 cents per American Depositary Receipt (ADR) on $53.8 million in revenue. The company has a history of solid performance in the earnings spotlight; according to First Call, Ctrip.com has exceeded analysts' consensus estimates in each of the previous four quarters. And, in contrast to Olson's skepticism, Catherine Leung of Citi Investment Research believes that the online travel firm can pull off another positive surprise.

MAJOR PAPERS:

• The Wall Street Journal reported that after years of rapid grows, many hedge funds are shutting their doors or merging with others, as expansion has dramatically slowed. As a result, the industry is being dominated mostly by big firms, such as Och-Ziff Capital Management Group LLC (NYSE: OZM), D.E. Shaw & Co., and Paulson and Co.
• Shares of Ctrip.com International Ltd (NASDAQ: CTRP), China's major Internet travel booker with about 58% of the country's online travel business, have dropped about 30% in the last six weeks alone creating a possible buying opportunity, according to the Wall Street Journal's "Heard in Asia". Travel in China is expected to grow solidly in the long-term and Ctrip.com said it expects revenue to grow 30% for the three months ending June 30 from a year earlier.
• In a move that could potentially usher in a new phase in the credit crunch, the Financial Times reported that The Goldman Sachs Group Inc (NYSE: GS) is said to be close to finalizing a plan to restructure a $7B investment vehicle formerly run by Cheyne Capital, a London-based hedge fund.

• The Washington Post reported the proposed merger between XM Satellite Radio Holdings Inc (NASDAQ: XMSR) and Sirius Satellite Radio Inc (NASDAQ: SIRI) was under fire yesterday by senior members of the Congressional Black Caucus, who said the deal does not provide enough opportunities for minority-owned programming.

Priceline (NASDAQ: PCLN)'s unbelievable quarter, which saw the company best earnings estimates by $0.12, may mean that investors pay attention to CTRIP.com (NASDAQ: CTRP) numbers due out next week. While numbers were up across the board international bookings surged.

Priceline's gross bookings growth momentum continued in the fourth quarter with international growth accelerating to 113.0% year-over-year and the domestic growth rate increasing sequentially to 24.2% led by increasing retail airline ticket bookings," said Jeffery H. Boyd, Priceline's President and Chief Executive Officer. "Internationally, we believe that our wide geographic reach, new market initiatives and extensive inventory are providing sustained impetus for growth. We believe that in the United States, our value positioning and brand promotion through offline and online channels is driving above-category growth rates in an uncertain economic environment.

CTRIP.com is the Chinese equivalent of Priceline. The company has also seen earnings grow nicely, and with a growing Chinese middle class, leisure activities are becoming more and more in demand. Throw in the Olympics this summer, and CTRIP may very well benefit from all this as it is the leader in bookings fields in China. With the stock beaten down, investors may want to take a closer look at this interesting Chinese travel play.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no position in any stock mentioned as of 2/18/08.