Analyst upgrades:

• Citigroup upgraded Lennar (NYSE: LEN) to Buy from Hold as it believes the company's near-term liquidity profile is improved following the $400M debt issuance. The firm raised its target price to $12 from $11.
• Jefferies upgraded Rowan Companies (NYSE: RDC) to Buy from Hold as it believes jack-up drillers will continue to outperform deepwater names. The firm raised its target price to $27 from $20.
• Keefe Bruyette upgraded First Financial (NASDAQ: FFIN) to Market Perform from Underperform to reflect more positive loan data for the Texas banks. The firm raised its target price on shares to $44 from $38.
• MGM Mirage (NYSE: MGM) was upgraded to Overweight from Neutral at JP Morgan.
• Morgan Stanley (NYSE: MS) was upgraded to Outperform from Market Perform at JMP Securities.
• Brinker (NYSE: EAT) was upgraded to Overweight from Equal Weight at Barclays.

Analyst upgrades:

• Merriman upgraded Dendreon (NASDAQ: DNDN) to Buy from Neutral on expectations shares will react positively to the full IMPACT data release on April 28. The firm thinks Provenge could represent the first cancer immunotherapy approved in the U.S. and raised its valuation range on the stock to $33-$34 from $18-$19.
• Piper Jaffray upgraded Andersons (NASDAQ: ANDE) as it believes the valuation is attractive, investor expectations are low, and the company's fertilizer and rail segments could recovery in FY10. The firm has a $19 target on shares. Goldman upgraded the auto sector to Neutral from Cautious and added Ford (NYSE: F) to its Conviction Buy list. The analyst does not believe Ford will have to declare bankruptcy and sees the company benefiting from Chrysler share declines and GM's (NYSE: GM) reduced product offerings. Ford's price target is $6
• Banc of America/Merrill upgraded U.S. Airways (NYSE: LCC) to Buy from Underperform.
• Broadcom (NASDAQ: BRCM) was upgraded to Equal Weight from Underweight at Morgan Stanley.
• Caterpillar (NYSE: CAT) was raised to Overweight from Neutral at JP Morgan.

MOST NOTEWORTHY: MedicNova, Transocean and Lennox were today's noteworthy initiations:

• Rodman & Renshaw is positive on MedicNova's (NASDAQ:MNOV) two primary products in development: MN-221, for the treatment of severe asthma and MN-166, an oral treatment for multiple sclerosis. The firm is also positive on MNOV's valuation; shares were initiated with an Outperform rating and $9 target.
  
• Transocean (NYSE:RIG) is UBS's Top Pick as they believe it is the primary beneficiary of rising deepwater dayrates. Shares were assumed with a Buy rating and $201 target.
  
• Suntrust initiated Lennox (NYSE:LII) with a Neutral rating and cites near-term visibility.

OTHER INITIATIONS:

• Dean Foods (NYSE:DF) was initiated with an Outperform rating and $29 target.
  
• Goldman started Parker-Hannifin (NYSE:PH) with a Neutral rating and $92 target.
  
• UBS assumed Hercules Offshore (NASDAQ:HERO) and Pride International (NYSE:PDE) with Neutral ratings and targets of $35 and $49, respectively.

Dean Foods Co. (NYSE: DF) stock is falling this morning after the company posted an adjusted fourth-quarter profit of 27 cents per share, below analysts' expectations of 30 cents per share. Although DF reported an increase in sales, the company's profit suffered from rising commodity costs and lower gross profit margins. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on DF.

After hitting a one-year high of $50.50 in March, the stock hit a one-year low of $24.11 in September. This morning, DF opened at $24.37. So far today the stock has hit a low of $24.23 and a high of $26.08. As of 10:55, DF is trading at $24.82, down $2.11 (-7.8%). The chart for DF looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Hershey (NYSE: HSY) is recently up $0.51 to $43.01 on renewed & unconfirmed takeover chatter. HSY call option volume of 10,491 contracts compares to put volume of 570 contracts. HSY November option implied volatility of 45 is above its 26-week average of 24 according to Track Data, suggesting traders buying calls for an upside move.

Dean Foods (NYSE: DF) is recently trading up $0.45 to $27.41 on renewed takeover chatter. DF, a leading food & beverage company, reduced 3Q & full-year earnings expectations on 10/2. DF is expected to announce full 3Q EPS on 11/8. DF November 30 calls have traded 108 times on transaction volume of 3,888 contracts above its open interest of 874 contracts. DF November option implied volatility is at 57 according to Track Data, suggesting larger price risk.

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

The news just continues to be "decidedly less than stellar," (to put it diplomatically), regarding Dean Foods Co.'s (NYSE: DF) business execution.

Dean Foods cut its full-year EPS estimate to about $1.25 versus the Reuters consensus estimate of $1.47 -- citing a consumer pull-back prompted by rising dairy prices at the retail level.

If was the second time this year that Dean Foods had cut full-year earnings estimates. In a statement, CFO Jack Callahan said the company expects an oversupply of organic milk to continue to affect results for the balance of this year and into at least the first half of 2008. In addition, overall sales have softened as consumers adjusted their consumption habits to cope with record-high food prices, Callahan said.

Dean Foods Co. (NYSE: DF) stumbled in early trading after announcing job cuts and a lower profit forecast due to higher costs and slowing sales. A Stifel Nicolaus analyst also cut his price target on the stock by $3 to $31 and lowered his earnings estimates for the stock. However, the analyst did maintain a buy rating on the company, as he expects cost pressures to ease. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on DF.

After hitting a one-year high of $50.50 in March, the stock fell to a one-year low of $24.11 in late September. This morning, DF opened at $24.66. So far today the stock has hit a low of $24.56 and a high of $26.77. As of 10:45, DF is trading at $26.12, down $0.17 (-0.6%). The chart for DF looks bearish but improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a December bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in 3 months as long as DF is below $30 at December expiration. Dena Foods would have to rise by more than 14% before we would start to lose money.

MOST NOTEWORTHY: Cadbury Schweppes, the food sector, Marsh & McLennan, Broadcom and Danone were today's noteworthy downgrades:

• Bear Stearns downgraded Cadbury Schweppes Plc (NYSE: CSG) shares to Underperform from Peer Perform as they are less confident the company will achieve its objective of divesting its beverage business at a reasonable price before the end of 2008.
  
• Bear downgraded the food group to Market Weight from Overweight based on valuations and macro economic trends. The firm downgraded Dean Foods Company (NYSE: DF) and Kellogg Company (NYSE: K) to Peer Perform from Outperform.
  
• JP Morgan downgraded shares of Marsh & McLennan Companies Inc (NYSE: MMC) to Neutral from Overweight citing management turnover which will impact the company's operating turnovers.
  
• JMP Securities downgraded Broadcom Corporation (NASDAQ: BRCM) to Market Perform from Outperform on valuation.
  
• Bear Stearns downgraded Groupe Danone (OTC: GDNNY) to Peer Perform from Outperform due to near-term headwinds; the firm prefers Nestle SA (OTC: NSRGY).

OTHER DOWNGRADES:

• Morgan Stanley downgraded the U.S. mortgage finance stocks to In Line from Attractive.
  
• Keefe Bruyette downgraded Legg Mason Inc (NYSE: LM) to Market Perform from Outperform.
  
• MercadoLibre Inc (NASDAQ: MELI) was downgraded at Merrill Lynch to Neutral from Buy.
  
• Oppenheimer downgraded Michael Baker Corporation (AMEX: BKR) to Neutral from Buy.

Dean Foods Co. (NYSE: DF) opened at $31.83. So far today the stock has hit a low of $31.79 and a high of $32.20. As of 10:40 this morning, DF is trading at $31.87, up $0.28 (0.9%).

After hitting a one year high of $50.50 in March, the stock slumped to a year low of $30.50 in June. As Kevin Shult noted earlier, Merrill Lynch & Co. Inc. (NYSE: MER) upgraded Dean Foods from sell to neutral this morning, giving shares a lift to start the day. We can leverage this information into an options trade that will hopefully make a nice return for us. Technical indicators for DF are bearish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $30 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make a 13.6% return in less than 6 weeks as long as DF is above $30 at August expiration. DF would have to fall by more than 5% before we would start to lose money.

DF hasn't been below $30 except for a few days since January and has shown support around $31 recently. This trade could be risky if the company's earnings (due out August 2) disappoint, but even if that happens, it looks like this position could be protected by the strong support the stock found just around $31 where it has bounced twice in the past month. Plus, its 200 day moving average is right at $31 and that could also provide some support.

Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Brent neither owns nor controls positions in DF.

MOST NOTEWORTHY: Nortel Networks Corp (NT), Bristol-Myers Squibb Co (BMY) and the select airliners were today's most noteworthy downgrades:

• Goldman cut Nortel Networks (NYSE: NT) to Sell from Neutral as the firm believes shares fully discount a successful execution on the cost restructuring.

• HSBC downgraded Bristol-Myers Squibb (NYSE: BMY) to Underweight from Neutral.

• JP Morgan sees few catalysts to drive airline shares higher and has downgraded the following stocks:

• AMR Corp (NYSE: AMR) and US Airways Group, Inc (NYSE: LCC) to Neutral from Overweight; Alaska Air Group, Inc (NYSE: ALK) and UAL Corp (NASDAQ: UAUA) to Underweight from Overweight; Continental Airlines, Inc (NYSE: CAL) and JetBlue Airways Corp (NADAQ: JBLU) to Underweight from Neutral.
  

OTHER DOWNGRADES:

• Keefe Bruyette downgraded Countrywide Financial Corp (NYSE: CFC) to Underperform from Market Perform, citing the impact of tighter credit standards for the move.

• OfficeMax Inc (NYSE: OMX) was cut to Underperform from Peer Perform at Bear Stearns.

• Matrix USA downgraded PepsiCo, Inc (NYSE: PEP) to Hold from Buy on valuation.

• Merrill Lynch downgraded Dean Foods Co (NYSE: DF) to Sell from Neutral.

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

MORE NOTEWORTHY: The aluminum sector, National City Corp (NCC), MGM Mirage (MGM) and Domtar Corp (UFS) were some of today's notable downgrades:

• Prudential downgraded the aluminum industry to Unfavorable from Favorable, cutting cut Alcoa Inc (NYSE: AA) to Neutral from Overweight and Alcan Inc (NYSE: AL) to Underweight from Overweight. Prudential cited the increased Chinese output growth and slowing U.S. demand for aluminum for the downgrades.

• Keefe Bruyette cut National City Corp (NASDAQ: NCC) to Underperform from Market Perform based on higher credit costs and near-term capital requirements.

• MGM Mirage (NYSE: MGM) was downgraded to Sell from Hold at Matrix USA citing valuation.

• Citigroup cut Domtar Corp (NYSE: UFS) to Sell from Hold with a $9 target based on valuation.

OTHER DOWNGRADES:

• Dow Chemical Co (NYSE: DOW) was removed from Credit Suisse's U.S. Focus List.

• Prudential cut Dean Foods Co (NYSE: DF) to Neutral from Buy based on valuation and volatile short-term raw milk prices.
  

• Barrington downgraded Cintas Corp (NASDAQ: CTAS) to Market Perform from Outperform with a $40 target based on poor Q3 earnings and lower revised guidance.

• Methanex Corp (NASDAQ: MEOH) was cut to Underperform from Market Perform at BMO Capital.

• Buffalo Wild Wings (NASDAQ: BWLD) was downgraded to Hold from Buy with a $67 target at Jefferies based on valuation.

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

MOST NOTEWORTHY: International Game Tech (IGT), Cephalon (CEPH) and CVS Corp (CVS) top today's list of upgrades.

• International Game Tech (NYSE:IGT) was upgraded to Buy from Hold at Soleil and to Outperform from Peer Perform at Bear Stearns. Both firms cited valuation as the reason.
• Cephalon, Inc. (NASDAQ:CEPH) was upgraded to Strong Buy from Buy at First Albany following the news that the company was granted a composition of matter patent covering Nuvigil by the U.S. Patent & Trademark Office.
• CVS Corp (NYSE:CVS) was added to Goldman Sachs Americas Conviction Buy List based on valuation.

OTHER UPGRADES:

• American Tech upgraded EDO Corp (NYSE:EDO) to Hold from Sell based on valuation.
• Dean Foods Company (NYSE:DF) was upgraded to Buy from Hold at A.G. Edwards based on valuation.
• Finally, Broadcom Corp. (NASDAQ:BRCM) was upgraded to Outperform from Market Perform at Raymond James.

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