After the closing bell on Thursday, JB Hunt (NYSE: JBHT) announced earnings that missed analyst expectations as profit fell 12% in the quarter, but analysts remain generally optimistic on the stock. A Goldman Sachs analyst maintained his buy rating on the company, saying that the weak trucking results may hurt shares for a few days, but the intermodal railroads, which carry goods between other modes of transportation, are more important to the company. A KeyBanc Capital Markets analyst said he was also impressed with the company's gains in the intermodal market. If you agree with these analysts and think that the company 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 JBHT.

After hitting a one-year high of $31.94 in July, the stock has been slipping over the past few months. JBHT opened this morning at $26.86. So far today the stock has hit a low of $26.36 and a high of $27.07. As of 11:30, JBHT is trading at $27.49, up $0.40 (1.48%). The chart for JBHT looks bearish but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a February bull-put credit spread below the $22.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 19% return over just 4 months as long as JBHT is above $22.50 at February expiration. The stock would have to fall by more than 19% before we would start to lose money.

JBHT hasn't been below $22.50 since January and has shown support around $25.50 recently. This trade could be risky if the company's next earnings (due out a few weeks before February expiration) disappoint, but even if that happens, the stock would have to break through strong historic support before this position is in trouble.

Meg Massie is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Meg neither owns nor controls positions in JBHT.

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MOST NOTEWORTHY: Polaris Industries, Edwards Lifesciences, BearingPoint and Fortis were today's noteworthy upgrades:

• Rochdale upgraded Polaris Industries (NYSE: PII) to Buy from Hold, as they have increased confidence in the company's ability to achieve estimates.
  
• Piper upgraded shares of Edwards Lifesciences (NYSE: EW) as they believe the bad news is behind the company with a U.S. turnaround expected in 2008.
  
• Jefferies raised shares of BearingPoint (NYSE: BE) to Hold from Underperform on valuation as they believe the risk/reward is neutral following the recent pullback.
  
• Fortis (OTC: FORSY) was upgraded to Outperform from Peer Perform at Bear Stearns. The firm upgraded shares on valuation as they believe the recent weakness is overdone.

OTHER UPGRADES:

• Goldman Sachs added Research in Motion Limited (NASDAQ: RIMM) and Commercial Metals (NYSE: CMC) to its Conviction Buy List.
• Credit Suisse upgraded Varian Semiconductor (NASDAQ: VSEA) to Outperform from Neutral.
  
• Bear upgraded Bruker Biosciences (NASDAQ: BRKR) and Hutchison Telecom (NYSE: HTX) to Outperform from Peer Perform.
  
• Banc of America upgraded Werner Enterprises (NASDAQ: WERN) and J.B. Hunt (NASDAQ: JBHT) to Neutral from Sell.

MOST NOTEWORTHY: Home Depot (NYSE: HD) and Google (NASDAQ: GOOG) were the most notable upgrades for the first trading session of 2007.

• Home Depot (NYSE: HD) was upgraded to Strong Buy from Hold with a $50 target at Raymond James, expecting that the worst is over in the housing market with hopes 2007 will be a better year.

• Google (NASDAQ: GOOG) was added to Stifel Nicolaus' Select List while maintaining its Buy rating, citing Google's growth rate as compared to its peers. Note that Stifel removed eBay (NASDAQ: EBAY) from their Select List.

OTHER UPGRADES:

• Bear Stearns upgraded JB Hunt Transport (NASDAQ: JBHT) to Outperform from Peer Perform with a $27 target; the firm expects JB Hunt to Outperform its pure truckload competitors during the downturn and for a potential buyer to surface.

• Bear Stearns also upgraded Merck (NYSE: MRK) to Outperform from Peer Perform with a $53 target, based on improved sales growth for Vytorin/Zetia, growth from Junuvia and vaccines, along with pipeline catalysts.

• Piper Jaffray upgraded shares of Pacific Sunwear (NASDAQ: PSUN) to Outperform from Market Perform with a $25 target, believing that tight inventory management favors margin improvement and that business at core stores have stabilized.

• Calyon upgraded UAL Corp (NASDAQ: UAUA) to Add from Neutral and raised their target to $48 from $35 based on good prospects for 2007.

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

MOST NOTEWORTHY: Today's notable initiations include NetFlix (NFLX) and Diamond Foods (DMND):

• Bank of America started NetFlix Inc. (NASDAQ:NFLX) with a Sell rating and $24 target, as they expect increasing subscriber acquisition costs and decreasing average revenue per subscriber to be challenging for the long-term;
• Diamond Foods Inc. (NASDAQ:DMND) was initiated with a Buy rating and $23 target at Oppenheimer, as the firm believes Diamond Foods has a solid core business and sees healthy growth with the Emerald products division.

OTHER INITIATIONS:

• JB Hunt Transort Services Inc. (NASDAQ:JBHT) was initiated with a Hold rating at McDonald.
• Duke Energy Corp. Holding Co. (NYSE:DUK) was initiated with a Hold rating and $35 target at Deutsche Bank, citing valuation.
• JP Morgan initiated shares of International Coal Group Inc. (NYSE:ICO) with an Underweight rating, citing difficult business conditions for Central Appalachian coal miners.
• Rochdale initiated Cypress Semiconductor Inc. (NYSE:CY) with a Buy rating and $21 target; the firm believes new business, operating efficiencies and the SunPower (SPWR) investment will improve profitability in 2007.

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

MOST NOTEWORTHY: Circuit City (CC), Best Buy (BBY) and Eli Lilly (LLY) top today's list of downgrades.

• Prudential downgraded Circuit City Stores Inc. (NYSE:CC) to Underweight from Neutral, with a $22 target, citing concerns of flat-panel TV price erosion and the high cost structure as compared with Best Buy and other retailers.
• In addition, Best Buy Co., Inc. (NYSE:BBY) was also downgraded by the firm to Neutral from Overweight with a $50 target, citing third-quarter margins that were below expectations.
• Credit Suisse removed Eli Lilly & Co. (NYSE:LLY) from their U.S. Focus List.

OTHER DOWNGRADES:

• Deutsche Bank downgraded L-T-L transporters JB Hunt Transportation Services Inc. (NASDAQ:JBHT) and YRC Worldwide Inc. (NASDAQ:YRCW), citing valuation.
• Sirius Satellite Radio Inc. (NASDAQ:SIRI) was downgraded at Bernstein to Market Perform from Outperform, based on the lower subs forecasts and the fact that Sirius is more reliant in the retail after-market than competitor XM Satellite Radio Holdings Inc. (NASDAQ:XMSR).
• AG Edwards downgraded Micron Technology Inc. (NYSE:MU) to Sell from Hold, citing the DRAM pricing risk; the firm said prices are currently running at more than twice its projected trend and it sees a risk of a correction in the next few months.

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