Eli Lilly (LLY) announced Wednesday that burglars broke into a Connecticut-based warehouse over the weekend and stole roughly $75 million in prescription drugs. According to police, the break-in happened either late Saturday or early Sunday. According to LLY, "dozens of pallets" of antidepressants were stolen, including Prozac, Cymbalta, Zyprexa (an anti-psychotic), and other medicines. The police called the theft a "well-planned event."

The company stated that it is working with the U.S. FDA Office of Criminal Investigations and other law enforcement officials. LLY's senior vice president of global equity noted that the company has "taken quick and appropriate actions to ensure the safety of our medicines." The company added that the "U.S. pharmaceutical distribution system is tightly controlled and monitored, making it extremely difficult for stolen product to make it to patients through legitimate channels."

Global pharmaceutical giant Merck & Co. Inc. (MRK), whose brands include Claritin, Coppertone, Lotrimin, Propecia, Singulair and Vytorin, is scheduled to discuss its fourth-quarter and full-year financial results in a conference call Monday, Feb. 16, at 8:00 AM (ET), hosted by CEO Richard T. Clark and CFO Peter N. Kellogg. A live webcast of the call will be available at the company's website.

During the three months that ended in December, Merck merged with Schering-Plough, appointed a chief medical officer and announced a quarterly dividend. Analysts surveyed by Thomson Reuters are looking for earnings for that period of $0.78 per share, down from $0.90 per share in the previous quarter and $0.87 per share a year ago. But revenue for the fourth quarter is expected to have jumped 60.8% from a year ago to $9.7 billion.

Incyte (INCY - option chain) shares are rising today after the company announced it entered into a worldwide license and collaboration agreement with Eli Lilly & Co. (LLY) for the development and commercialization of Incyte's INCB28050. The drug is currently being studied in a mid-stage trial for rheumatoid arthritis. Incyte stock has been showing support around $7.95 and resistance in the $8.89 range. 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 INCY.

INCY opened this morning at $8.88. So far today the stock has hit a low of $8.70 and a new 52-week high of $9.00. As of 12:40, INCY is trading at $8.98 up 49 cents (5.8%). The chart for INCY looks bullish.

Analyst upgrades:

• Deutsche Bank upgraded T. Rowe Price (TROW) to buy from hold due to valuation and solid core trends. The firm raised its target on shares to $57 from $55. Note the firm downgraded Franklin Resources to hold from buy (see below).
• KeyBanc upgraded U.S. Steel (X) to buy from hold based on stable domestic cost environment in 2010 and likelihood of sustained higher spot pricing. The firm has a $65 target on shares.
• Goldman upgraded Canadian Natural Resources (CNQ) to buy from neutral, citing oil leverage, sizable resource base and free cash flow. The firm raised its target to $90 from $88.
• Darden (DRI) was upgraded to buy from neutral at UBS.
• Carnival (CCL) was upgraded to overweight from neutral at JPMorgan.
• AmerisourceBergen (ABC) was upgraded to overweight from equal weight at Barclays.

Biogen Idec (BIIB) has made a bit of news the past two days, starting with Thursday's news that William Young is the company's new chairman of the board. BIIB's Bruce Ross will complete his term as director and will step down from the board at BIIB's 2010 shareholder meeting. William Young will take over effective January 1, 2010. Young is a veteran of the biotech industry, as he served with Monogram Biosciences, Genentech (where he was CEO), and Eli Lilly.

Ross noted, "I am pleased the Board has selected Bill Young as Biogen Idec's new Chairman. He is an experienced biotechnology and pharmaceutical industry executive with an extensive understanding of Biogen Ides, given his 12 years of service as a director of the company."

This is the third screening to find value among Fortune's 25 corporate world leaders that have demonstrated an ability to regenerate themselves from within. The list has been cut to 18 and will be cut further here.

The methodology of using basic stock data points to identify potential value investments only sets the stage for success -- it assures nothing. While it is true that paying less is better than paying more and getting a higher yield is better than less, this gives you a scant picture of what is in people's hearts and minds, and that is harder to judge. Like the weather, no matter the predictions, you may not find out it is raining until you are standing in it. Regardless, it should be advantageous to start with good stock (pun intended) before you take to whittlin', and that we have.

Yesterday I started a review of 25 companies that Fortune deemed most successful according to their peers in developing quality leadership. Today I review the remaining 20, searching to find the ones that might be worth investing in.

Price-to-book (from 11/27/09) was used as the first value screen. The theory being from a value investor's perspective that buying for a price at or near the break-up value of the company provides downside protection. Of course that is easier said than done.

Analyst upgrades:

• Stephens upgraded Quidel (QDEL) to equal weight from underweight on valuation following the recent pullback in shares. The firm keeps a $16 price target on the stock.
• UBS upgraded Clearwire (CLWR) to neutral from sell, citing the company's funding, which increases opportunities. The firm raised its price target to $6 from $3.
• Oppenheimer upgraded Mattson Technology (MTSN) to outperform from perform on expectations the company will benefit from a cyclical recovery in memory capex spending in 2010. The firm raised its target on shares to $4 from $3.
• Eli Lilly (LLY) was upgraded to sell from conviction sell at Goldman.
• Kinross Gold (KGC) was upgraded to overweight from neutral at JPMorgan.
• Limited Brands (LTD) was upgraded to hold from sell at Soleil.

The recent issue of Fortune magazine discusses how the best of the best train, guide and nurture top managers to become the leaders that will propel their corporations successfully forward. They list the top 25 companies, which I have used as the basis of a new review to see how they would fair against common metric screens.

In the past few months, many articles have posited that large-cap stocks should excel in the coming year based on their lagging the market behind smaller, more volatile stocks flying out of the March lows. I do not believe this is universally true. Plenty of large-cap stocks did well, such as Anadarko Petroleum (APC), Apple (AAPL) and Google (GOOG), while many small caps went nowhere. Even among the large caps included in Fortune's "Leadership 25," some have doubled.

Eli Lilly & Co. (NYSE: LLY) stock has unexpectedly meandered since the June 8, 2009 Buy recommendation at a price of $34.10, but the aforementioned probably represents selected investor jitters about the likely, federal health care reform legislation.

Ignore those jitters. The major components of health care reform have not been determined as of September 30, 2009, but the pharma calculation remains the same as it was in June. The legislation will be net-positive for major pharmaceutical companies, under the thesis that there will be 30-45 million more U.S. residents regularly - as opposed to sporadically - accessing health care services over the next decade, not including population growth.

Pharmaceutical company Eli Lilly & Co. (NYSE: LLY) is planning to cut 5,500 jobs over the next few years and reorganize into five business units. The company is looking to reduce costs and accelerate how long it takes new drugs to get to market, especially as its top performers see their patents expire. This translates to a workforce reduction of close to 14% – to 35,000. This measure doesn't include new positions in emerging markets with high potential and Japan.

The company hopes to cut as much as possible through attrition and retirements – and it would not indicate how many other positions would have to be cut.

Eli Lilly's goal is to slash its annual cost by $1 billion during this restructuring. The new business units will be: cancer, diabetes, established markets, emerging markets and Elanco, which is its animal health business. This is a change from the existing functional model, which separates U.S. and global marketing for each drug in the company's portfolio. Through the new structure, Lilly says, drug development and marketing will be tied more closely.

"While companies have been cutting dividends at an historic pace over the last 24 months, the fact is that there are still quality companies with long histories of paying dividends that represent good long-term investments," says Chuck Carlson, a specialist in companies offering dividend reinvestment plans.

In his top-notch The DRIP Investor he says, "The seven stocks featured here have each been paying a dividend for over 100 years, have raised their dividend annually for at least the last quarter century and offer direct-purchase plans.

DuPont (NYSE: DD) closed at $32.57. August 11 DD options were active on volume of 349,770 contracts into today's ex-dividend. DD August option implied volatility of 33; September is at 35; below its 26-week average 43 according to Track Data, suggesting decreasing price movement.

Eli Lilly (NYSE: LLY) closed at $33.18. LLY goes ex dividend today with a 49 cents dividend. On August 11 LLY options were active on volume of 28,953 contracts. LLY August option implied volatility is at 28, September is at 27; below its 26-week average of 31, suggesting decreasing price movement.

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

Analyst upgrades:

• Deutsche Bank upgraded HealthSouth (NYSE: HLS) and Rehabcare (NYSE: RHB) to Buy from Hold after raising its Post Acute Care sector view to Positive from Neutral. The firm believes volumes and margin leverage can drive better than expected Q2 results and 2009 guidance. The firm raised its target on HealthSouth shares to $16 from $12 and on Rehabcare to $28 from $19.
  
• Jefferies upgraded Moody's (NYSE: MCO) to Hold from Underperform to reflect stabilizing credit markets and its belief regulatory concerns are overstated. The firm raised its target on shares to $30 from $19.
  
• Keefe Bruyette upgraded Goldman Sachs (NYSE: GS) to Outperform from Market Perform as it finds the stock inexpensive following the better than expected results. The firm has a $195 target on shares.
• Vale (NASDAQ: VALE) was upgraded to Buy from Neutral at BofA/Merrill.
  
• CNOOC (NYSE: CEO) was upgraded to Overweight from Equal Weight at Morgan Stanley.
  
• International Game Tech (NYSE: IGT) was upgraded to Buy from Neutral at Janney Montgomery.
  

Analyst upgrades:

• JPMorgan upgraded Franklin Resources (NYSE: BEN) to Overweight from Underweight to reflect performance and sales improvements, as well as benefits from the weakening U.S. dollar. The firm has a $94 target on the stock.
• Oppenheimer upgraded FormFactor (NASDAQ: FORM) to Outperform from Perform after channel checks indicated orders are recovering. The firm raised its target on shares to $30 from $22.
• KeyBanc upgraded Oshkosh (NYSE: OSK) to Buy from Hold citing the company's MRAP-ATV contract win, which they view as a "game changer." The firm has a $30 target on the stock.
• Novellus (NASDAQ: NVLS) was upgraded to Neutral from Underperform at Credit Suisse.
• Ternium (NYSE: TX) was upgraded to Buy from Neutral at Goldman.
• Cathay General (NASDAQ: CATY) was upgraded to Buy from Neutral at B. Riley.