Western Digital (NYSE: WDC - option chain) shares are rising today after Standard & Poor's announced yesterday that WDC will be added to the S&P 500 to replace Embarq (NYSE: EQ), which is being acquired by CenturyTel Inc. (NYSE: CTL). When this happens, mutual funds and other services that track the S&P 500 will have to buy WDC, which usually gives the stock a boost higher or at least a floor. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WDC.

WDC opened this morning at $24.95. So far today the stock has hit a low of $24.35 and a high of $25.25. As of 11:30, WDC is trading at $24.68 up 0.32 (1.3%). The chart for WDC looks bearish and S&P gives WDC a negative 2 STARS (out of 5) sell ranking.

Analyst upgrades:

• Calyon upgraded major network carriers based on falling oil prices and capacity cuts. The analyst is positive over the next 12 months but cautious short-term given the uncertain economy, and volatile markets and oil prices. AMR Corp (NYSE: AMR) and Delta Air (NYSE: DAL) were upgraded to Add from Neutral and UAL Corp (NASDAQ: UAUA) was raised to Neutral from Reduce.
• Ryanair (NASDAQ: RYAAY) was upgraded at Citigroup to Buy from Hold.
• Boardwalk Pipeline (NYSE: BWP) was raised to Buy from Hold at Deutsche Bank.
• Cowen lifted Biogen Idec (NASDAQ: BIIB) to Outperform from Neutral.
• JP Morgan upgraded Choice Hotels (NYSE: CHH) to Neutral from Underweight following the better-than-expected Q3 report.
• Oppenheimer upgraded shares of Integra LifeSciences (NASDAQ: IART) to Outperform from Perform on valuation, the company's minimal exposure to economic conditions, and expectations for margin improvement and a rebound in organic growth.

Analyst downgrades:

• Sherwin-Williams (NYSE: SHW) and AerCap Holdings (NYSE: AER) were downgraded to Neutral from Overweight at JP Morgan.
• UBS downgraded Embarq (NYSE: EQ) to Neutral from Buy following the CenturyTel (NYSE: CTL) merger announcement.

MOST NOTEWORTHY: Auto & Truck Suppliers, Oplink Comm and The Wet Seal were today's noteworthy upgrades:

• Baird upgraded the Auto & Truck Suppliers sector to Market Overweight from Market Weight citing valuations, lowered expectations, industry dynamics and a potential bottom in economic indicators. The firm upgraded Accuride Corp (NYSE: ACW) and Magna International (MGA) to Outperform from Neutral.
  
• Merriman upgraded shares of Oplink Comm (NASDAQ: OPLK) to Neutral from Sell on valuation, as they believe Friday's sell-off fully reflects near-term operating concerns and that share price downside from here is limited.
  
• Cowen raised The Wet Seal (NASDAQ: WTSLA) to Outperform from Neutral and has increased confidence that the new management's operational changes and cost cutting initiatives will lead to EPS upside.

OTHER UPGRADES:

• BT Group (NYSE: BT) was raised to Equal Weight from Underweight at Morgan Stanley.
  
• Societe Generale raised Royal Dutch Shell (NYSE: RDS.A) to Buy from Hold and ENI SpA (NYSE: E) to Hold from Sell.
  
• Goldman raised Embarq (NYSE: EQ) to Neutral from Sell.

MOST NOTEWORTHY: Adobe, National Oilwell Varco and Cirrus Logic were today's noteworthy upgrades:

• Deutsche Bank upgraded shares of Adobe (NASDAQ:ADBE) to Buy from Hold following the strong Q4 results, as they believe the negative sentiment around the stock creates an attractive entry point.
• Calyon upgraded shares of National Oilwell Varco (NYSE:NOV) to Buy from Add on valuation, as they believe the market's reaction to the Grant Prideco (NYSE:GRP) acquisition was overly negative. They view GRP as a good strategic fit.
• Cirrus Logic (NASDAQ:CRUS) was upgraded to Buy from Hold at Jefferies on valuation, as they believe the risk/reward is attractive.

OTHER UPGRADES:

• Credit Suisse raised its rating on International Paper (NYSE:IP) to Outperform from Neutral.
• JP Morgan upgraded Embarq (NYSE:EQ) to Overweight from Neutral.
• UBS upgraded Royal Ahold (AHONY) to Neutral from Sell.

MOST NOTEWORTHY: The U.S. clean energy sector, MGI Pharma, Apple and Kosan Biosciences were today's noteworthy initiations:

• Morgan Stanley initiated the U.S. clean energy sector with an Attractive view. The analyst assumed coverage of First Solar (NASDAQ: FSLR), Fuel Tech (NASDAQ: FTEK) and SunPower Corporation (NASDAQ: SPWR) with Overweight ratings and EnerNOC, Inc (NASDAQ: ENOC) with an Underweight rating.
  
• Banc of America started shares of MGI Pharma (NASDAQ: MOGN) with a Buy rating and $45 target, as they expect sales growth in 2008 to be driven by Aquavan, which they view as an underappreciated asset, and potential survival data for Dacogen.
  
• Soleil believes Apple (NASDAQ: AAPL) could nearly double its PC market share to between 5.5% and 6% over the next five years. The firm started shares with a Buy rating and $200 target.
  
• Roth Capital initiated Kosan Biosciences (NASDAQ: KOSN) with a Buy rating and $10 target, as they are positive on the company's Hsp90 program and expect an NDA filing as early as 2009 in the relapsed-refractory settings.

OTHER INITIATIONS:

• KeyBanc Capital initiated CastlePoint Holdings (NASDAQ: CPHL) with a Buy rating and $16 target.
  
• Time Warner Telecom (NASDAQ: TWTC) was started at Cowen with an Outperform rating.
  
• Jefferies resumed coverage of Windstream (WIN) with a Hold rating and $16 target and Embarq Corporation (NYSE: EQ) with a Buy rating and $68 target.

MOST NOTEWORTHY: Embarq Corp (EQ) and Boston Scientific Corp (BSX) were today's most notable downgrades:

• Goldman Sachs downgraded Embarq Corp (NYSE: EQ) to Sell from Neutral based on valuation and potential margin dilution.

• Boston Scientific Corp (NYSE: BSX) was downgraded to Peer Perform from Outperform at Bear Stearns based on regulatory and competitive challenges.

OTHER DOWNGRADES:

• Despite expectations of strong Q4 results and 2007 guidance, Needham downgraded Garmin Ltd (NASDAQ: GRMN) to Hold from Buy based on valuation, as they believe the multiple the market is willing to give the stock is likely to decline as PNDs continue to increase as a percentage of revenue.

• Roth Capital downgraded China BAK Battery Inc (NASDAQ: CBAK) to Hold from Buy.

• DA Davidson downgraded Weyerhaeuser Co (NYSE: WY) to Neutral from Buy.

• BMO Capital Markets downgraded Brady Corp (NYSE: BRC) to Market Perform from Outperform.

• Wachovia downgraded Boyd Gaming Corp (NYSE: BYD) to Market Perform from Outperform, expecting weakness in 2007 from the Las Vegas locals market and Atlantic City.

• Penn National Gaming Inc (NASDAQ: PENN) was downgraded to Hold from Buy at Deutsche Bank citing valuation.

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