During 2009, drug treatments for ten diseases in the U.S. will bring pharma companies nearly $170 billion in sales. Those include drugs for major killers like cardiovascular diseases and a number of cancers. Also among the most successful emerging treatments are ones for mental disorders.

Patents on a number of the older blockbuster drugs are running out and a new generation of biotech drugs is offering competition to traditional treatments. Some of the companies that are in the next wave of solving medicine's largest problems are worth watching.

Analyst upgrades:

• Citigroup upgraded Allergan (NYSE: AGN) to Buy from Hold to reflect increased estimates for Botox and its belief Latisse guidance looks conservative. The firm raised its target on shares to $57 from $45.
  
• Jefferies upgraded Texas Instruments (TXN) to Hold from Underperform after channel checks indicated business is strengthening. Jefferies believes Texas Instruments' September quarter guidance will come in better than expected and raised its target on shares to 23 from $16.
  
• FBR Capital upgraded Peabody Energy (BTU) to Outperform from Market Perform to reflect "strong" long-term steel and steam demand trends from China and India. The firm raised its target on shares to $44 from $36.
  
• Elan Corp (ELN) was upgraded to Buy from Neutral at UBS.
  
• Affymetrix (AFFX) was upgraded to Equal Weight from Underweight at Morgan Stanley.
  
• ASML Holding (ASML) was upgraded to Buy from Neutral at BofA/Merrill.

Elan Corp (NYSE: ELN - option chain) stock is falling today after Biogen (NASDAQ: BIIB) reported another serious brain infection in a patient being treated with Tysabri. Tysabri is a MS drug whose revenues are shared by BIIB and ELN. 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 ELN.

This morning, ELN opened at $7.37. So far today the stock has hit a low of $6.87 and a high of $7.49. As of 11:15, ELN is trading at $6.88, down 48 cents (-6.5%). The chart for ELN looks neutral and S&P gives ELN a neutral 3 STARS (out of 5) hold ranking.

If you've been following Elan Corp. (NYSE: ELN) lately, you've probably come to take any story of a deal, takeover, sale with a grain of salt.

This morning, Elan shares soared over 16% after stories on Reuters and the Wall Street Journal over the weekend said it is in advanced talks to sell a minority stake to Bristol-Myers Squibb (NYSE: BMY). Moreover, Elan was said to be in talks with a second suitor, but the status of those discussions was unclear. This, Reuters reported, could be the first move in a multi-step transaction to sell Elan outright.

While the shares are still up a healthy 12% by midday, now Bloomberg reports that according to UBS analysts, Bristol isn't in talks to buy a stake in Elan.

Analyst upgrades:

• Goldman upgraded Intercontinental Exchange (NYSE: ICE) to Conviction Buy from Neutral and raised their target to $90 from $60. Goldman cites ICE's positioning and potential for upward EPS revisions for the upgrade.
  
• Jefferies upgraded FMC Technologies (NYSE: FTI) to Buy from Hold as they believe solid deepwater activity levels will lead to solid EPS results in 2009 and 2010. The firm raised their price target to $45 from $27.
  
• Friedman Billings upgraded Devon Energy (NYSE: DVN) to Outperform from Market Perform on valuation and expects significant improvement in basis differentials for the company's Barnett production starting the second half of Q2. The firm raised their price target to $60 from $50.
• Elan Corp (NYSE: ELN) was raised to Neutral from Sell at Piper Jaffray.
  
• Banco Santander (NYSE: STD) was upgraded at Keefe Bruyette to Outperform from Market Perform.

Analyst upgrades:

• Thomas Weisel upgraded SanDisk (NASDAQ:SNDK) to Market Weight from Underweight. Thomas Weisel said they are less negative on the outlook for memory industry dynamics but they do expect SanDisk shares to be range bound.
  
• Citigroup upgraded shares of Hershey (NYSE:HSY) to Buy from Hold as they believe Hershey is benefiting from increased advertising spending and the consumer trade-down to less expensive chocolate. The firm maintains a $39 target on the stock.
  
• Deutsche Bank upgraded Best Buy (NYSE:BBY) to Buy from Holdas they believe the company will be a beneficiary from the Circuit City liquidation.
• Ericsson (NASDAQ:ERIC) was upgraded to Neutral from Sell at Goldman.
  
• Advance Auto Parts (NYSE:AAP) and Virgin Media (NASDAQ:VMED) were raised to Overweight from Neutral at JP Morgan.
  
• NewMarket (NYSE:NEU) was upgraded at KeyBanc to Buy from Hold.

Analyst downgrades:

• Citigroup downgraded Kellogg (NYSE:K) to Hold from Buy as they believe the company's U.S. trends are decelerating and that FX trends will have a negative impact. The firm lowered their target price to $47 from $58.
  
• Jefferies downgraded Cerner (NASDAQ:CERN) to Hold from Buy following Eclipsys' (NASDAQ:ECLP) negative pre-announcement as they believe both companies are suffering from a downturn in hospital spending. Jefferies lowered their target on Cerner to $38 from $51.
  
• Oppenheimer cut Amdocs (DOX) to Perform from Outperform following the weak Q1 results citing lack of near-term catalysts and the macroeconomic slowdown.
• Eclipsys (NASDAQ:ECLP)was downgraded to Underperform from Buy at Jefferies and to Neutral from Buy at Piper Jaffray.
  
• PetSmart (NASDAQ:PETM) was downgraded to Hold from Buy at Deutsche Bank.
  
• Fulton Financial (NASDAQ:FULT) was lowered to Underperform from Market Perform at Keefe Bruyette.

Analyst initiations:

• Wunderlich initiated Republic Services (NYSE:RSG) with a Buy rating and $30 target and believes the company should enjoy sustainable pricing leverage following the merger with Waste Management.
  
• RBC Capital initiated Elan Corp (NYSE:ELN) with an Underperform rating and $4 target based on Tysabri uncertainty, bapineuzumab clinical risk, MS competition, and debt overhang.
  
• Oppenheimer expects Ligand Pharmaceuticals (NASDAQ:LGND) to become an aggressive acquirer of financially distressed biotech companies with the completion of the acquisition of Pharmacopeia. Shares were assumed with an Outperform rating and $5 target.
• Zebra Tech (NASDAQ:ZBRA) was initiated with a Neutral rating and $25 target at JP Morgan.
  
• Activision (NASDAQ:ATVI) was reinitiated at Friedman Billings with an Outperform rating and $14 target.
  
• Ameren (NYSE:AEE) was assumed with a Hold rating at Jesup & Lamont.

Elan (NYSE: ELN) said it is initiating a strategic review which could result in a minority investment, a strategic alliance, a merger, or a sale. ELN closed at $8.03 Monday. ELN February call option implied volatility is at 103, puts are at 112, above its 26-week average of 100 according to Track Data, suggesting larger price movement..

Biogen Idec (NASDAQ: BIIB) closed at $48.45 Monday. BIIB and ELN have a 50-50 stake in the multiple sclerosis drug Tysabri. ELN said it is initiating a strategic review which could result in a minority investment, a strategic alliance, a merger or a sale. BIIB February option implied volatility of 56 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Crucell NV (NASDAQ: CRXL), a biopharmaceutical company, and Wyeth (NYSE: WYE) confirmed on January 7 the two firms are in discussion to combine. CRXL closed at $22.63 Monday. CRXL February option implied volatility of 58 is near its 26-week average of 61, according to Track Data, suggesting non-directional price movement.

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

It's been a tough year for many industries -- there's no denying it. Retailers of all stripes, oil companies, construction firms, financials, basic materials companies -- you name it, it's down.

So, are there any safe havens?

Historically, in times of economic uncertainty the pharmaceutical industry, along with consumer staples, is often the "go to" place where, at a minimum, you can count on a nice dividend yield to shield your portfolio from gigantic losses. Not anymore.

In this downturn even stalwarts such as Merck (NYSE: MRK) and Pfizer (NYSE: PFE) trade near their multi-year lows, despite offering generous yields.

What about biotechs? That sector has performed much better.

However, one of my favorite biotech names, Elan (NYSE: ELN), is struggling.

At the start of the year, ELN was looking strong. Its stock was up by 50% by mid-summer. Since then shares have collapsed and now trade in the mid-single digits.

I profiled the company on July 2, with one caveat: If late-stage testing of a new Alzheimer's drug called bapineuzumab doesn't go as planned, then ELN will trade lower.

About a month later, the company announced that the results of a Phase II clinical study showed the drug does safely treat the symptoms of Alzheimer's disease, but the results were not statistically significant, and the 234-person Phase II study would have to be broadened to a much larger Phase III study to be considered for FDA approval.

The shares fell 17% on the announcement, but that was just the start. As is often the case, when it rains, it pours.

Analyst upgrades:

• Merriman upgraded shares of Netezza (NYSE: NZ) to Buy from Neutral following the company's solid Q2 results as they believe it is well-positioned for strong operating results heading into 2H09.
  
• JP Morgan raised Cabot (NYS: CBT) to Overweight from Neutral. The firm expects 2009 to be a better year given lower raw material costs and higher contract prices.
  
• JP Morgan also upgraded Royal Ahold (OTC: AHONY) to Overweight from Neutral on valuation.
  
• Liberty International (OTC: LBYIY) was upgraded to Hold from Sell at Deutsche Bank.
  
• BMO Capital upgraded Royal Bank (NYSE: RY) to Market Perform from Underperform and Bank of Montreal (NYSE: BMO) to Outperform from Market Perform.

Analyst downgrades:

• Jefferies downgraded shares of Constellation Energy (NYSE: CEG) to Underperform on Hold on concerns the company will come under increasing pressure to issue equity. The firm lowered its target to $60 from $71.
• Thomas Weisel downgraded Williams-Sonoma (NYSE: WSM) to Market Weight from Overweight citing continued macro pressures.
  
• Wachovia has concerns that Kayne Anderson's (NYSE: KED) book value will be pressured by its investment in ProPetro Services, trading losses associated with SemGroup, and negative developments at Quest Midstream. The firm cut shares of Kayne to Market Perform from Outperform.
• Energy Conversion (NASDAQ: ENER) was downgraded to Neutral from Buy at Piper.
  
• Deutsche Bank cut International Paper (NYSE: IP) and Domtar (NYSE: UFS) to Hold from Buy.
  
• H&E Equipment (NASDAQ: HEES) was lowered at Credit Suisse to Neutral from Outperform.

Analyst initiations:

• Morgan Stanley yesterday initiated Elan Corp (NYSE: ELN) with an Overweight rating. The firm sees a low-probability of a Tysabri withdrawal.
  
• ThinkPanmure views On Semiconductor (NASDAQ: ONNN) as a nice turnaround story with opportunities for shares gains in notebooks and consumer gaming platforms. Shares were initiated with a Buy rating and $14 target.
• Petrohawk Energy (NYSE: HK) was assumed with an Outperform rating at Morgan Keegan.
  
• Regency Energy (NASDAQ: RGNC) was initiated at Merrill Lynch with a Neutral rating.

"If you want to buy a great company dirt cheap, think Biogen Idec (NASDAQ: BIIB)," says biotech expert Michael Shulman. Here's an update from ChangeWave Biotech Investor.

"Biogen recently got hammered on 'bad' news that wasn't actually so bad. BIIB and partner Elan (NYSE: ELN) reported that two MS patients, out of 31,800 currently receiving Tysabri, developed a rare brain malady called PML.

"It's important to note, here, that the two companies had predicted that one in 1000 cases could develop PML and the FDA let the drug come to market with this understanding with a strong set of patient warnings and physician follow up.

"Tysabri has succeeded in the marketplace because it is a superior treatment for MS -- and the patients who use it agree, despite its high cost of $30,000 per year. I expect only a very small drop off in market acceptance for Tysabri and when it becomes apparent the drug is still desired by patients and doctors, the stock should rebound significantly.

"BIIB is still targeting 100,000 patients by 2010 and that would translate into $1 billion per quarter in sales.The two cases of PML cut the stock by almost 30% -- and that's ridiculous. It's simply too big a move for a cash-rich, risk-free company with several major drugs -- especially Rituxan which is taking more market share every quarter.

"Biogen Idec also has the ability to add new products through licensing or direct acquisition, and I expect it to do so in the coming quarters. This temporary downturn is a godsend for investors! BIIB is now selling well below the valuations of other large-cap, double-digit biotech growers. Take advantage of this mistake before the Street wakes up."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Biogen (NASDAQ: BIIB) was trading at $54.71 in pre-open trading, below its close of $69.76 Thursda. BIIB and Elan (NYSE: ELN) announced their multiple sclerosis treatment Tysabri, was linked to brain infection. BIIB August option implied volatility was at 42, September at 39; near its 26-week average of 39 according to Track Data, suggesting non-directional price movement.

ELN was trading at $10.78 in pre-open trading, below its close of $20.05. ELN August option implied volatility was at 65, October at 58; below its 26-week average of 70, suggesting decreasing price movement.

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

Crocs (NASDAQ: CROX) is trading at $5.06 late this morning, well below its close of $8.94. CROX lowered Q2 and 2008 financial guidance. Robert Baird Co lowered its rating to Neutral from Outperform. CROX over all option implied volatility of 91 is above its 26-week average of 84 according to Track Data, suggesting larger price movement.

Mechel Steel (NYSE: MTL) closed at $22.84, and is trading up this morning at $26.40. MTL sold off 38% on July 24 after Russian Prime Minister Vladimir Putin ordered antitrust authorities to investigate selling prices at steel and coal group MTL. MTL August option implied volatility is at 162, October is at 105, above its 26-week average of 66 according to Track Data, suggesting larger price fluctuations.

Elan Corp (NYSE: ELN) closed at $32.34 and, as of 11:15 Friday morning, is trading at $33.43. ELN's & WYE's Bapineuzumab (Alzheimer's treatment) Phase 2 trial results will be presented at the International Conference on Alzheimer's Disease on July 29. ELN August option implied volatility is at 97, October is at 70; above its 26-week average of 69 according to Track Data, suggesting larger price fluctuations.

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

Elan Corp (NYSE: ELN) is recently trading at $28.41 in pre-open trading, above its close of $27.11 Monday.

ELN and Wyeth (NYSE: WYE)'s Bapineuzumab (Alzheimer's treatment) Phase 2 trial results were positive. Detailed results of the trial will be presented at the International Conference on Alzheimer's Disease on July 29, 2008.

ELN July option implied volatility is at 107, October is at 82; above its 26-week average of 68 according to Track Data, suggesting larger price movement.

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

Elan Corp (NYSE: ELN) & Wyeth (NYSE: WYE) Bapineuzumab (Alzheimer's treatment) Phase 2 trial results are expected in Q2.

ELN June option implied volatility is at 75, July is at 96 and October is at 80; above its 26-week average of 66 according to Track Data, suggesting larger price movement.

Volatility Index S&P 500 Options-VIX at 19.06; 10-day moving average is 17.99

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

MOST NOTEWORTHY: Trina Solar, Adtran and Elan Corp were today's noteworthy upgrades:

• Friedman Billings upgraded Trina Solar (NYSE: TSL) to Market Perform from Underperform citing expectations for improved FCF following the company's announcement to discontinue its in-house poly manufacturing.
  
• Thomas Weisel believes Adtran (NASDAQ: ADTN) is in a multi-year transition where new products are able to offset continued declines in the legacy products. Shares were raised to Overweight from Market WEight, and also upgraded at Raymond James to Strong Buy from Outperform.
  
• Goldman upgraded shares of Elan Corp. (NYSE: ELN) to Buy from Neutral to reflect their outlook for Tysabri and Bapineuzumab.

OTHER UPGRADES:

• Suntrust upgraded BOK Financial (NASDAQ: BOKF) to Buy from Neutral.
  
• Plains All American (NYSE: PAA) was upgraded at Morgan Stanley to Overweight from Equal Weight.
  
• Morgan Keegan upgraded Diodes (NASDAQ: DIOD) to Outperform from Market Perform.