Analyst upgrades:

• Citigroup upgraded Adtran (NASDAQ: ADTN) to Buy from Hold on expectations the company will benefit from the broadband Stimulus funds.
• Morgan Stanley upgraded Continental Airlines (NYSE: CAL) to Overweight from Equal Weight based on relative valuation and views the company as a "survivor." Additionally, the analyst lowered 2009 industry estimates but believes it is the last cut for the year and is incrementally more positive on the sector.
• Morgan Stanley also upgraded EXFO Electro-Optical (NASDAQ: EXFO) to Overweight from Market Weight based on valuation.
• Tata Motors (NYSE: TTM) was upgraded to Buy from Hold at Deutsche Bank.
• Ascent Solar (NASDAQ: ASTI) was upgraded to Neutral from Underweight at JP Morgan.
• Mechel Steel (NYSE: MTL) was upgraded to Neutral from Underperform at Credit Suisse.

EXFO Electro-Optical Engineering (NASDAQ: EXFO) specializes in the design and manufacture of equipment used by telecommunications carriers, cable television companies and public utilities operators to test and monitor their networks. It also provides light-based systems used in medical device and opto-electronics assemblies, as well as fluorescence microscopy and electrophysiology instruments used in the life sciences sector. Customers include AT&T (NYSE: T) and Nortel Networks (NYSE: NT). Agilent Technologies (NYSE: A) is a major competitor.

The company pleased investors last week, when it reported fiscal Q2 EPS of six cents and revenues of $43.3 million. Analysts had been expecting two cents and $42.3 million. Management also guided Q3 EPS to between four and seven cents (five cent consensus) and Q3 revenues to between $45 million and $48 million ($46.93 million consensus). Further, the firm announced a deal to acquire Internet Protocol applications tester Brix Networks for $28.5 million in cash. RBC Capital Markets and Roth Capital subsequently reiterated "buy" ratings on the stock and declared price targets in the $7-$8 range