MOST NOTEWORTHY: Hershey Foods, Genentech and Garmin were today's noteworthy downgrades:
Bernstein downgraded Hershey Foods (NYSE: HSY) to Market Perform from Outperform, citing commodity cost pressures & slowing volume growth.
Thomas Weisel downgraded Genentech (NYSE: DNA) to Market Weight from Overweight after the company reported Q1 results, due to Avastin growth concerns and a lack of meaningful drivers of long-term revenue growth until 2009.
Oppenheimer cut Garmin (NASDAQ: GRMN) to Perform from Outperform on concerns regarding PND pricing and the company's profitability dynamics.
OTHER DOWNGRADES:
Blackrock (NYSE: BLK) was downgraded at Goldman to Neutral from Buy and to Market Perform from Outperform at Wachovia.
After hitting a one-year high of $84.83 in June, the stock hit a one-year low of $56.20 in February. CEPH opened this morning at $64.94. So far today the stock has hit a low of $64.45 and a high of $66.18. As of 12:45, CEPH is trading at $65.27, up 1.05 (1.6%). The chart for CEPH is neutral and improving, while S&P gives the stock a bullish 4 Stars (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $55 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. For this particular trade, we will make a 7.5% return in just five weeks as long as CEPH is above $55 at May expiration. Cephalon would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
CEPH hasn't been below $56 at all in the past year and has shown support around $59 recently. This trade could be risky if the company's earnings (due out on 5/1) disappoint, but even if that happens, that position could be protected by support the stock might find between $55 and $60, where it bottomed out in the past two months. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CEPH or MLNM.
Yesterday, I met up with a health care venture capitalist. He mentioned that M&A is likely to be a big factor over the next few years. After all, major pharma companies will have a variety of their blockbuster drugs go off-patent.
Well, interestingly enough, we got a mega-deal today; that is, Takeda Pharmaceuticals (the top drug company in Japan) has agreed to pay $8.8 billion for Millennium Pharmaceuticals (NASDAQ: MLNM), which develops biopharmaceuticals for such things as cancer and inflammatory diseases (its top drug is Velcade). There is also a key strategic relationship with Johnson & Johnson (NYSE: JNJ).
No doubt, the Millennium deal is fairly rich – with a valuation at 17 times revenues. Then again, Millennium is growing quickly and has a promising stable of drugs. And as for Takeda, it has two major drugs -- Prevacid and Actos – that will come off-patent in 2009 and 2011. In other words, the company has really no other option but to pay up on deals.
In today's trading, Millennium's stock price is up 49.72% to $24.48.
Stock futures were lower this morning amid fears of weak earnings reports and jitters about oil prices, which continue to rise today.
Stocks fell Wednesday after a lowered outlook from UPS, seen as an economic bellwether, and oil briefly topping $112 a barrel, bringing the Dow industrials down 49 points or 0.4%, the Nasdaq Composite down 26 points or 1.1%; and the S&P 11 points or 0.8% lower.
On the economic calendar today, the weekly jobless claims data for the week ending April 5 is due out this morning at 8:30 a.m. EDT. According to Bloomberg, claims are expected to be around 386,000, and anything above 400,000 will fuel concerns about the weakening of the job market. Investors will also be watching March chain store sales reports. The day began with an upbeat report from Costco (NASDAQ: COST), whose sales rose 7%. Wal-Mart (NYSE: WMT) then reported its same-store sales rose 0.7%, which was below analysts' estimates of 1%, but said it expects better April figures. The company said its inventory in US stores is well managed.
Dupont (NYSE: DD) said in a statement today that its first quarter earnings topped forecasts.
MOST NOTEWORTHY: Wilmington Trust, DiamondRock Hospitality and Omrix Biopharm were today's noteworthy initiations:
B. Riley initiated Wilmington Trust (NYSE: WL) with a Neutral rating and $33 target and points out the company has greater exposure to construction and development loans than most small- and mid-cap banks.
DiamondRock Hospitality (NYSE: DRH) was assumed with a Market perform rating and $13.50 target at Keefe Bruyette. The firm sees limited upside given expectations for continued moderation in RevPAR trends, limited operating margin expansion and an uncertain economic outlook.
Rodman & Renshaw believes that the issues that have plagued Omrix Biopharm (NASDAQ: OMRI) are now largely reflected in shares and that the company has improved visibility on business fundamentals with solid execution. The firm assumed coverage with an Outperform rating and $18 target.
OTHER INITIATIONS:
UBS initiated Millennium Pharma (NASDAQ: MLNM) with a Neutral rating and $16 target.
Credit Suisse initiated Ryanair (NASDAQ: RYAAY) with a Neutral rating.
Morgan Stanley started Brasken (NYSE: BAK) with an Underweight rating.
MOST NOTEWORTHY: New York Community Bancorp, Gushan Environmental and Central European Distribution were today's noteworthy initiations:
Citigroup believes New York Community Bancorp (NYSE: NYB) is uniquely-positioned to benefit from the current operating environment and expects loan growth, NIM expansion, and good credit to boost EPS growth over the next year. The firm initiated shares with a Buy rating and $19 target.
Oppenheimer said Gushan Environmental (NYSE: GU) benefits from the Chinese government's policies encouraging growth of renewable fuels; shares were initiated with an Outperform rating and $14 target.
Jefferies initiated Central European Distribution (NASDAQ: CEDC) with a Buy rating and $66 target and views the company as a pure play on rising disposable incomes, particularly in Poland where it is headquartered.
OTHER INITIATIONS:
Lehman assumed Ciena (NASDAQ: CIEN) with an Overweight rating and $35 target.
BMO Capital started Millenium Pharma (NASDAQ: MLNM) with an Outperform rating and $18 target.
MOST NOTEWORTHY: Monsanto, AstraZeneca and Millenium Pharmaceutical were today's noteworthy upgrades:
Banc of America upgraded shares of Monsanto (NYSE: MON) to Buy from Neutral as they have grown more comfortable with two previous concerns: competition and valuation. They see an attractive entry point ahead of strong expected results for Q2.
UBS upgraded shares of AstraZeneca (NYSE: AZN) to Neutral from Sell on valuation, as they believe many of the risks are priced into shares at current levels.
Piper upgraded Millenium Pharma (NASDAQ: MLNM) to Buy from Neutral and added shares to their Alpha List ahead of additional front-line Velcade presentations at ASCO and expected front-line Velcade approval by June 20.
MOST NOTEWORTHY: Ericsson, Total SA, Research in Motion, MasterCard and Sun Microsystems were today's noteworthy upgrades:
Goldman upgraded shares of Ericsson (NASDAQ: ERIC) to Buy from Neutral and added the company to their pan-Europe Conviction Buy List, as they believe the factors that lead to the October earnings miss will be rectified and the company will report upside to Q4 estimates.
Credit Suisse upgraded Total SA (NYSE: TOT) to Outperform from Neutral based on valuation and expectations for a return in upstream volume growth in 2008.
Credit Suisse also upgraded Research in Motion (NASDAQ: RIMM) to Outperform from Neutral, citing RIMM's expanding international market share.
MasterCard (NYSE: MA) was raised to Buy from Hold at Deutsche Bank, as they believe the company's margin potential is yet to be fully priced into shares or Street estimates.
Citigroup raised shares of Sun Microsystems (NASDAQ: JAVA) to Buy from Hold to reflect the company's improving product line, restructuring, and share buyback. They find the risk/reward attractive and expect solid Q2 results.
OTHER UPGRADES:
Goldman added Oracle (NASDAQ: ORCL) to its Conviction Buy List.
MOST NOTEWORTHY: Sprint Nextel, Safeway, PharmaNet Development, Millennium Pharmaceutical and Telefonica were today's noteworthy upgrades:
Wachovia upgraded shares of Sprint Nextel Corporation (NYSE: S) to Outperform from Market Perform as they believe the company is within six months of reaching a sustainable turnaround in subscriber growth and that investor expectations can not get much lower.
CIBC upgraded shares of Safeway Stores Inc (NYSE: SWY) to Sector Outperformer from Sector Performer after the company's strong quarter in a challenging environment.
Jefferies raised its rating on PharmaNet Development Group Inc (NASDAQ: PDGI) to Buy from Hold as they believe the company should achieve leverage in margins after executing its turnaround.
Millennium Pharmaceuticals Inc (NASDAQ: MLNM) was upgraded to Outperform from Neutral at Baird. The firm said expectations for Millennium and Velcade are low and would be buyers for the quarter given the ASH meeting and downstream pipeline visibility.
Telefonica SA (NYSE: TEF) was upgraded to Buy from Hold at Citigroup following the company's earnings growth guidance.
OTHER UPGRADES:
Centene Corporation (NYSE: CNC) was upgraded to Overweight from Equal Weight at Lehman Brothers.
MOST NOTEWORTHY: Toyota Motor Corp (TM), J.B. Hunt Transport Services (JBHT), SourceFire (FIRE), Kohl's Corp (KSS) and Millennium Pharmaceuticals (MLNM) were today's noteworthy upgrades:
Goldman upgraded shares of Toyota Motor Corp (NYSE: TM) to Buy from Neutral to reflect expectations for greater operating profits and margin expansion in 2007.
Keybanc upgraded shares of J.B. Hunt Transport (NASDAQ: JBHT) to Buy from Hold based on increased conviction in JBHT's ability to increase intermodal volumes, easier 2H and 2008 comps, buybacks and valuation.
Jefferies upgraded SourceFire Inc (NASDAQ: FIRE) to Buy from Hold after their checks indicated better Federal IT spending and solid sales activity.
Kohl's Corp (NYSE: KSS) was raised to Outperform from Neutral at Baird on valuation.
Millennium Pharmaceuticals (NASDAQ: MLNM) was upgraded to Market Perform from Underperform at Friedman Billings, citing recent monthly Velcade prescription trends for the move higher...
MOST NOTEWORTHY: Cadbury Schweppes plc (CSG), Adobe Systems (ADBE), Verizon Communications (VZ) and Arcelor-Mittal (MT) were today's noteworthy downgrades:
Citigroup downgraded shares of Cadbury Schweppes (NYSE: CSG) to Hold from Buy as they see limited upside now that the company is close to divesting its beverage division.
Adobe (NASDAQ: ADBE) was cut to Neutral from Buy at Goldman and was removed from the Americas Buy List as they do not believe revenue growth will significantly top 17% this year and may not meet investors high expectations.
Soleil downgraded shares of Verizon Communications (NYSE: VZ) to Sell from Hold on valuation as they think the stock is trading near the high end of a reasonable trading range. They believe shares are due for a 10%-15% correction.
Merrill expects carbon steel prices to come under pressure in Q3, sending Arcelor-Mittal (NYSE: MT) shares to Neutral from Buy...
MOST NOTEWORTHY: Select pharmaceutical companies, timber companies and Kona Grill Inc (NASDAQ: KONA) and were today's noteworthy initiations:
Medarex Inc (NASDAQ: MEDX) was initiated with a Positive rating at Susquehanna. The firm said Medarex has multiple drivers include a potential buyout by one of its existing partners, as well as clinical progress and the success of its technology platform in monoclonal antibody therapeutics.
Kona Grill was initiated with an Outperform rating at Cowen. The firm believes Kona can grow its asset base 10-fold at strong store-level cash-on-cash ROICs.
OTHER INITIATIONS:
Jefferies initiated shares of Input/Output Inc (NYSE: IO) with a Buy rating and $19 target.
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GM and Ford ready weak pitches for taxpayer bucks
Cramer on BloggingStocks: A troika of opportunity and trouble 
Before the bell: Wall Street headed higher; automakers, retailers in focus
