Analyst upgrades:

• FBR Capital upgraded CapitalSource (NYSE: CSE) to Outperform from Market Perform on valuation as it sees an attractive risk/reward at current levels. The firm raised its target on shares to $5 from $3.
• Kaufman Bros. upgraded The Knot (NASDAQ: KNOT) to Buy from Hold following the company's Q2 results to reflect stable national advertising and a better bottom-line outlook. The firm raised its target on shares to $11 from $8.50.
• Baird upgraded Obagi Medical (NASDAQ: OMPI) to Outperform from Neutral and raised its target to $10 from $7 following the strong Q2 report. The firm believes business bottomed in Q1 and the outlook is improving.
• IPC The Hospitalist Co. (NASDAQ: IPCM) was upgraded to Overweight from Equal Weight at Stephens.
• King Pharma (NYSE: KG) was upgraded at BofA/Merrill to Buy from Hold.
• Infinera (NASDAQ: INFN) was upgraded to Hold from Underperform at Jefferies.

Analyst upgrades:

• Keefe Bruyette upgraded KeyCorp (NYSE: KEY) to Outperform from Market Perform due to valuation and the company's capital position. The firm has an $8 target price on the stock.
• BofA/Merrill upgraded its view of the semiconductor sector and upgraded Intel (NASDAQ: INTC) and Marvell Technology (NASDAQ: MRVL) to Buy from Neutral, LSI Corp. (NYSE: LSI) to Buy from Underperform, and Maxim (NASDAQ: MXIM) and National Semiconductor (NYSE: NSM) to Neutral from Underperform. The firm now sees 2010 revenue growth of 21% vs. its prior estimate of 14% due to improving electric demand and lean inventories.
• Thomas Weisel upgraded Vital Images (NASDAQ: VTAL) to Overweight from Market Weight based on compelling valuation and potential upside from its new ViTAL Enterprise product offering.
• Jones Apparel (NYSE: JNY) was upgraded to Buy from Neutral at Goldman.
• Hess Corp. (NYSE: HES) was upgraded to Overweight from Equal Weight at Barclays.
• Nationwide Health (NYSE: NHP) was upgraded to Outperform from Market Perform at Morgan Keegan.

Analyst upgrades:

• Jefferies upgraded MDS Inc. (NYSE: MDZ) to Buy from Hold on valuation as it believes shares are pricing in a "worst case" scenario at current levels. The firm keeps a $6.50 target on the stock.
  
• JP Morgan upgraded Continental (NYSE: CAL) to Overweight from Neutral on valuation as it believes the recent sell-off is overdone. The firm keeps a $13 price target on the stock.
• Thomas Weisel is positive on Allergan's (NYSE: AGN) diverse product portfolio, global infrastructure, vertical integration, and deep pipeline. The firm upgraded shares to Overweight from Market Weight and has a $54 target on the stock.
• NetLogic (NASDAQ: NETL) was upgraded to Buy from Neutral at Piper.
  
• Dover (NYSE: DOV) was raised to Buy from Neutral at Banc of America/Merrill.
  
• Map Pharmaceuticals (NASDAQ: MAPP) was upgraded at Argus to Hold from Sell.

Analyst upgrades:

• Merriman upgraded Taser (NASDAQ: TASR) to Buy from Neutral as it believes current valuation levels do not reflect the company's market opportunities and that the law enforcement funding in President Obama's stimulus plan will boost sales in Q4 and FY10.
  
• Goldman upgraded Macy's (NYSE: M) to Buy from Neutral and added shares to its Conviction Buy List based on reduced balance sheet concerns and improved risk/reward. The firm also raised their target to $8.25 from $8.
  
• JP Morgan upgraded Family Dollar (NYSE: FDO) to Neutral from Underweight and raised its target to $29 from $19 following the better-than-expected Q2 report. The analyst continues to prefer Dollar Tree (NASDAQ: DLTR) and Wal-Mart (NYSE: WMT).
• Goldman removed Universal Am (NYSE: UAM) from the Conviction Sell List.
  
• McDermott (NYSE: MDR) was upgraded to Buy from Hold at Jefferies.
  
• Canadian Natural (NYSE: CNQ) was upgraded to Sector Outperformer from Sector Performer at CIBC.

MOST NOTEWORTHY: Obagi Medical, Medical, Microsemi, Marathon Oil and Encore Energy were today's noteworthy initiations:

• Obagi Medical Products (NASDAQ: OMPI) was initiated with a Positive rating at Susquehanna, as they like Obagi's growth opportunity in the aesthetics-dermatology market and views the company as an interesting take-out target for a larger specialty pharmaceutical company.
  
• Montgomery believes Microsemi Corporation's (NASDAQ: MSCC) core business is on track and gaining momentum based on leverage in both high-reliability and high-performance analog. The firm started shares with a Buy rating and $34 target.
  
• Goldman initiated Marathon Oil Corporation (NYSE: MRO) with a Buy rating and $72 target, as they view Marathon as most favorably leveraged refining company and would use seasonal weakness in refining margins as a buying opportunity.
  
• RBC Capital sees a large opportunity for Encore Energy Parners (NYSE: ENP) to grow its reserves from internal negotiated transactions from its parent, Encore Acquisition Companies (NYSE: EAC), starting shares off with an Outperform rating and $26 target.

OTHER INITIATIONS:

• BMO Capital initiated DCT Industrial Trust (NYSE: DCT) with a Market Perform rating.
  
• Lehman started shares of Darden Restaurants (NYSE: DRI) with an Overweight rating and $52 target.
  
• The firm also reinstated Radian Group (NYSE: RDN) and MGIC Investment Corporation (NYSE: MTG) with Underweight ratings.

Wall Street's equity market kicks into fifth gear this week with 8 IPOs and 6 Secondaries on the docket.

Those deals tentatively scheduled to price include:

IPOs:

Possible

• SP Acquisition (DSP), a 36M-share IPO for this business financing company. UBS Investment and Ladenburg Thalmann are the lead managers. Filing pricing: $10.00.

Midweek

• Mediatech Investment (MDTC), a 10M-share IPO for this business financing company. UBS Investment and JMP Securities are the lead managers. Filing range: $14.00-$16.00.

MOST NOTEWORTHY: The Railroad Sector and Obagi Medical (OMPI) were today's most notable initiations:

• Calyon Securities initiated coverage on the following stocks, all with Neutral ratings, including Burlington Northern Santa Fe Corp (NYSE: BNI), Canadian National Railway Co (NYSE: CNI), Canadian Pacific Ltd (NYSE: CP), CSX Corp (NYSE: CSX), Norfolk Southern Corp (NYSE: NSC).and Union Pacific Corp (NYSE: UNP).

• Obagi Medical (NASDAQ: OMPI) was initiated by Baird with an Outperform rating and $13 target; CIBC started the specialty pharmaceutical company with a Sector Outperformer rating and $14 target, saying the company is a pure play in the rapidly-growing aesthetics market and has expectations that the company's growth will accelerate due to the rise in physician-dispensed products.

OTHER INITIATIONS:

• MasterCard Inc (NYSE: MA) was initiated with a Neutral rating at Merrill Lynch.

• Xoma Ltd (NASDAQ: XOMA) was initiated with a Market Outperform rating at Rodman & Renshaw. The firm said XOMA's antibody technology licenses and manufacturing provide an important source of consistent and growing commercial revenues. Additionally, the broker said Raptiva is becoming a more meaningful contributor.

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