Analyst upgrades:

• Jefferies upgraded shares of Constellation Energy (NYSE: CEG) to Buy from Hold and raised its target to $26.50 from $25 on valuation as they believe MidAmerican Energy will consummate the merger. The firm points out shares are trading at a 14% discount to the $26.50 offer.
  
• Merriman upgraded Denny's Corp. (NASDAQ: DENN) to Buy from Neutral as they believe the company's restructuring and successful menu and food cost management should stabilize operating margins.
  
• Daimler (NYSE: DAI) was upgraded at Merrill to Buy from Neutral on valuation as they believe the stock is oversold at current levels.
• Taiwan Semi (NYSE: TSM) was upgraded to Overweight from Neutral at HSBC.
  
• Veolia Environnement (NYSE: VE) was lifted to Neutral from Underperform at Credit Suisse.
  
• Goldman raised PMC Sierra (NASDAQ: PMCS) to Buy from Neutral.

Analyst downgrades:

MOST NOTEWORTHY: Semiconductors, ADC Telecomm and Nationwide Financial were today's noteworthy upgrades:

• Banc of America upgraded the Semiconductor Sector to Overweight from Market Weight citing indications of a bottom given earnings estimate revision momentum and supply chain inventory levels. The firm upgraded Intel (NASDAQ:INTC), Power Integrations (NASDAQ:POWI) and Semtech (NASDAQ:SMTC) to Buy from Neutral and PMC Sierra (NASDAQ:PMCS) and LSI Corp (NYSE:LSI) to Neutral from Sell.
  
• Deutsche Bank upgraded shares of ADC Telecomm (NASDAQ:ADCT) to Buy from Hold as they believe April consensus estimates could prove conservative.
  
• UBS raised Nationwide Financial (NYSE::NFS) to Buy from Neutral and believes a higher offer by Nationwide Mutual is likely.

OTHER UPGRADES:

• Halliburton (NYSE:HAL) was upgraded to Buy from Neutral at Goldman.
  
• Westlate Chemical (NYSE:WLK) was raised to Overweight from Equal Weight at Morgan Stanley.

An important measure of the worth of a firm is the recognition it receives for service and support. There is a Santa Clara, California chip maker that regularly receives awards in that arena from the best possible sources.....its customers.

PMC-Sierra (NASDAQ: PMCS) provides broadband communications and storage semiconductors for the communications service provider, storage, and enterprise markets. Its switches, mappers, multiplexers, and other chips handle various protocols, including Ethernet, voice over Internet, and asynchronous transfer mode. Major customers include Alcatel-Lucent (NYSE: ALU), Cisco Systems (NASDAQ: CSCO), EMC (NYSE: EMC) and Hewlett-Packard (NYSE: HPQ). PMC-Sierra offers worldwide technical and sales support, including a network of offices throughout North America, Europe, Israel and Asia.

The firm surprised investors last week, when it said that it was undertaking a corporate restructuring that was expected to reduce ongoing annualized operating expenses by an estimated $20-$24 million per year. That led management to predict that Q1 revenues would ultimately fall between the middle and the high end of the previously announced $98-$105 million guidance range. On average, the Street had been expecting $101.99 million. UBS and Stifel Nicolaus subsequently reiterated "buy" ratings on the issue and declared price targets in the $9-$10 range. PMCS shares broke through concentrated moving average resistance on the news and have since been defining a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Altogether, brokers recommend the issue with one "strong buy," three "buys," ten "holds" and one "sell." Analysts see a 100% growth rate, through the next year. The PMCS Price to Sales ratio (3.50), Price to Book ratio (2.57) and Sales Growth rate (31.41%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 94% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $4.78 and $13.77. A stop-loss of $6.10 looks good here. Note that the firm is expected to report Q1 earnings on April 25th, after the close.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

Another semiconductor company focused on the communications sector was light on revenue. PMC-Sierra Inc.'s (NASDAQ:PMCS) miss follows a trend we have been blogging about over the past month. National Semiconductor Corporation (NYSE:NSM), Texas Instruments Incorporated (NYSE:TXN), Fairchild Semiconductor International (NYSE:FCS) and a few others have come up short. Jabil Circuit, Inc. (NYSE:JBL) last night also guided to weaker revenue for the current quarter.

It will be interesting to see if we get a pre-announcement warning from any of the big handset manufacturers, such as Motorola, Inc. (NYSE:MOT) or Nokia Corporation (NYSE:NOK).

The big question, of course, is what this means for the sector and for the overall economy in the next few quarters. Is this a recession signal?