Analyst Upgrades

• Amazon.com (AMZN) was upgraded to buy from neutral at BofA/Merrill.
• Netflix (NFLX) was upgraded to outperform from perform at Oppenheimer and to neutral from sell at Janney Montgomery.
• Janney Montgomery also upgraded BJ's Wholesale (BJ) to buy from neutral.
• RW Baird upgraded Kforce.com (KFRC), SFN Group (SFN) and Young Innovations (YDNT) to outperform from neutral.
• NetSuite (N) was upgraded to neutral from underweight and Select Comfort (SCSS) was upgraded to overweight from neutral at Piper Jaffray.
• Flushing Financial (FFIC) was upgraded to outperform from market perform at Keefe Bruyette.
• National Instruments (NATI) was upgraded to buy from hold at Stifel Nicolaus.
• RBC Capital upgraded MDS Inc. (MDZ) to outperform from sector perform.

MOST NOTEWORTHY: Horace Mann, Sonus Networks and Mellanox were today's noteworthy initiations:

• Keefe Bruyette views Horace Mann (NYSE: HMN) as fairly valued and expects the competitive personal lines environment and deteriorating loss trends to act as strong headwinds. Shares were assumed with a Market Perform rating and $19 target.
  
• Thomas Weisel initiated Sonus Networks (NASDAQ: SONS) with a Market Weight rating and $3.50 target and believes management's expectation for 20% FY08 revenue growth is too aggressive.
  
• Susquehanna expects Mellanox (NASDAQ: MLNX) to benefit from the growing end markets for InfiniBand technology, and started shares with a Positive rating and $20 target.

OTHER INITIATIONS:

• Jefferies initiated McKesson (NYSE: MCK) with a Buy rating and $67 target.
  
• Philip Morris (NYSE: PM) was initiated at JP Morgan with an Overweight rating and $62 target, and added to the firm's Analyst Focus List.
  
• Baird started Pharmasset (NASDAQ: VRUS) with a Neutral rating and $21 target.
  

Earnings continue going strong, and a host of important shareholder meetings also take place this week.

Monday May 7

• SEC to hold Open Commission Meeting at 9am
• McKesson Corporation (NYSE: MCK) to report Q4 earnings; conference call at 5pm. Analysts will concentrate on McKesson's pharmaceutical solutions revenue, new distribution clients/new business, new IT solutions introduced, labor/benefits costs, operating expenses, sector position by business line, and margins.

Tuesday May 8

• Echostar Communications Corporation (NASDAQ: DISH) to hold shareholder meeting at 2pm.
• Walt Disney Company (NYSE: DIS) to report Q2 earnings; conference call at 4:30pm.
• Electronic Arts Inc (NASDAQ: ERTS) to report Q4 earnings; conference call at 5pm. Investors will look for comments on how the company is integrating its game line-up onto the three new game systems -- PlayStation 3, Xbox 360 and Wii.

Wednesday May 9

• Eastman Kodak Company (NYSE: EK) to hold a shareholder meeting at 1pm.
• Ericsson (NASDAQ: ERIC) will hold a two-day capital markets meeting in Stockholm.

Thursday May 10

• Viacom Inc (NYSE: VIA) to report Q1 earnings; conference call at 8:30am. In addition to motion picture results, analysts will focus on VIA's broadcast advertising revenue, and the company's efforts to broaden its relatively-tight-demogaphic cable television audience.
  
• Microsoft Corporation (NASDAQ: MSFT) to hold Windows Mobile Business Update at 12pm.
• Google Inc (NASDAQ: GOOG) to hold a shareholder meeting at 5pm in Mountain View.

Friday May 11

• American International Group (NYSE: AIG) to report Q1 earnings; conference call at 8:30am. Analysts will concentrate of AIG's overall premium growth for its property/casualty unit, along with improved cost controls company-wide -- a pivotal factor for a superior performance, moving forward.
  

U.S. stocks rallied today a head of tomorrow's elections on a variety of takeover bids and merger agreements. The mergers and acquisitions announcements created a bullish equity environment for traders and investors. The S&P 500 is up 1.14%, NASDAQ 100 is up 1.64%, The Dow is up .93% and the 10 year bond rate declined to 4.709%. The CBOE VIX was down .06 to 11.10.

McKesson (MCK) agreed to acquire Per-Se Tech (PSTI), an Atlanta based provider of financial and administrative technology products for hospitals for $28 per share in cash. McKesson's $1.8 billion buyout of PSTI is expected to close in the 1st quarter of 2007. Per-Se Tech option implied volatility collapsed to 20 from 37 on the announcement, according to Track Data.

Four Seasons Hotels (FS) received a $3.7 billion ($82 a share) buyout offer from Isadore Sharp, Cascade Investment (an entity owned by William Gates) and Kingdom Hotels (a trust owned by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud). Four Seasons currently has 70 hotels in 31 countries. Four Seasons overall option-implied volatility collapsed to 15 from 32, indicating the confidence of this deal being completed.

KOS Pharma (KOSP) signed a definite agreement to be acquired by Abbott Labs (ABT) for $3.7 billion ($78 per share in cash). KOS Pharma develops pharmaceutical products for the treatment of cardiovascular and repository diseases. KOS Pharma option-implied volatility collapsed to 14 from 44 according to Track Data, suggesting the deal will be completed.

Swift Transportation (SWFT) confirmed it received a letter from Jerry Moyes, the largest shareholder, a current director and former chairman/CEO of the company. Moyes proposed to acquire all of SWFT's outstanding stock for $29 a share in cash. Swift Transportation overall option-implied volatility collapsed to 19 from 39 on the confidence the deal will be completed at a price higher than the $29 bid.

OSI Restaurant Partners (OSI) announced a definite agreement to be acquired by a group of investors lead by Bain Capital and company founders for $40. OSI over all option implied volatility collapsed to 14 from 32 on the confidence the deal will be completed.

PLAY, a developer of semiconductors, firmware and software platforms for portable media products, will be acquired Nivida (NVDA) for $13.50 in cash. PLAY option-implied volatility collapsed to 20 from 42 according to Track Data.

Option volume leaders today were Google, Inc. (GOOG), Citigroup, Inc. (C), TXU Corporation (TXU), the Home Depot, Inc. (HD) and Boston Scientific Corp. (BSX).

Options Update is provided by Paul Foster and TheFlyOnTheWall.com (subscription required).