Analyst Upgrades

• Medicis (MRX) to overweight from neutral at Piper Jaffray, to outperform from market perform at Bernstein, to outperform from sector perform at RBC Capital and to overweight from neutral at JPMorgan.
• Wellpoint (WLP) to buy from neutral at Davenport.
• Humana (HUM) to buy from hold at Jefferies.
• Frontier Oil (FTO) to equal weight from underweight and Resources Connection (RECN) to overweight from equal weight at Barclays.

MOST NOTEWORTHY: Penske Automotive, CarMax, Towerstream, Solera and Northstar were today's noteworthy initiations:

• Kevin Dann initiated shares of Penske Automotive Group Inc (NYSE: PAG) with a Buy rating and $25 target. The firm believes shares deserve a higher multiple given the company's reduced exposure to slower growing domestic brands combined with the increased penetration o luxury as a percentage of industry sales.
  
• CarMax Inc (NYSE: KMX) was also initiated at Kevin Dann with a Buy rating and $28 target, as they expect the multiple expansion to continue as confidence builds in the company's sales and expense strategy.
  
• Think Equities started shares of Towerstream Corporation (NASDAQ: TWER) with a Buy rating and $5 target and said the company is rapidly growing given robust demand fro high bandwidth services, market expansion, sales force growth, and higher ARPU services.
  
• Barrington believes Solera Holdings Inc (NYSE: SLH) is positioned to capture growth through technology adoption in claims processing by insurance companies, starting shares off with an Outperform rating and $27 target.
  
• Jefferies resumed coverage of Northstar Neuroscience Inc (NASDAQ: NSTR) with a Buy rating and $21 target, as they expect the company's Phase III EVEREST trial to yield positive positives, setting the stage for an FDA approval by Q109.

OTHER INITIATIONS:

• Friedman Billings started shares of IPG Photonics Corporation (NASDAQ: IPGP) with an Outperform rating and $28 target and added shares to its Top Picks List.
  
• The firm also resumed coverage of Rofin-Sinar Technologies Inc (NASDAQ: RSTI) with an Outperform rating and $92 target.
  
• ABN Amro started China Netcom Group Corporation (NYSE: CN) with a Hold rating and China Mobile Limited (NYSE: CHL) and China Unicom Limited (NYSE: CHU) with Buy ratings.
  
• UBS started RSC Holdings Inc (NYSE: RRR) with a Neutral rating.

MOST NOTEWORTHY: Nordstrom Inc (JWN) and Federated Dept Stores (FD) were today's most notable initiations:

• JP Morgan initiated Federated Dept Stores (NYSE: FD) with a Neutral rating. They believe Federated's merger remains a struggle while the company's valuation is stretched.
• JP Morgan see Nordstrom Inc (NYSE: JWN) as one of the strongest retail models in their universe, but consider the stock's valuation to be rich. The firm initiated Nordstrom with a Neutral rating.
  

OTHER INITIATIONS:

• IPG Photonics (NASDAQ: IPGP), a designer and manufacturer of optical fiber-based lasers and fiber amplifiers, was initiated at five research firms this morning: Needham, Jefferies and Merrill Lynch with a Buy rating, Lehman Brothers with an Equal Weight rating and Thomas Weisel with an Overweight.

• Guidance Software (NASDAQ: GUID) was initiated at three firms: With a Buy rating at AG Edwards, an Overweight rating at Morgan Stanley and an Outperform rating at Wachovia.

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