MOST NOTEWORTHY: Clayton, PharmaNet Development, Royal Bank of Scotland, Progressive Gaming and WSFS Financial were today's noteworthy downgrades:

• JMP Securities downgraded shares of Clayton Holdings Inc (NASDAQ: CLAY) to Market Perform from Outperform citing lack of visibility in the non-agency MBS market. William Blair also downgraded shares to Market Perform from Outperform after the company's in-line quarter, to reflect lowered estimates and uncertainty regarding a recovery time.
• Jefferies downgraded shares of PharmaNet Development Group Inc (NASDAQ: PDGI) to Hold from Buy as they believe departures of board and management executives have introduced new risk.
• The Royal Bank of Group PLC (NYSE: RBS) was lowered to Sell from Buy at Citigroup, as they are negative on the company's acquisition of ABN Amro Holding NV (NYSE: ABN).
• ThinkEquity downgraded shares of Progressive Gaming International Corporation (NASDAQ: PGIC) to Accumulate from Buy following Friday's announcement that it lost its post-trial motions and will proceed to appeals court in the Webb lawsuit. PGIC will have to post a $20M bond, which is more than the firm expected.
• B. Riley downgraded shares of WSFS Financial Corporation (NASDAQ: WSFS) to Neutral from Buy after they lowered their estimates to reflect the company's higher projected on-interest expense.

OTHER DOWNGRADES:

• Goldman removed Hewlett-Packard Company (NYSE: HPQ) from its Conviction Buy List.
• Calyon downgraded VeraSun Energy Corporation (NYSE: VSE) to Add from Buy.
• Merrill Lynch downgraded Aetna Incorporated (NYSE: AET) to Neutral from Buy.
• Friedman Billings downgraded Baker Hughes Incorporated (NYSE: BHI) to Market Perform from Outperform.

In my continuing series of the top 25 stocks for the NEXT 25 years, the next name is Progressive Gaming Corp. (NASDAQ: PGIC). Progressive Gaming is headquartered in Las Vegas, Nevada and sells its products around the world. The stock is at $5.40 and carries a current market capitalization of $210 million. PGIC provides integrated casino and jackpot management solutions to the gaming world. The company has two major divisions: slot and table games and its systems division. The slot and tables division develops, licenses and distributes branded table games like the World Series of Poker, Texas Hold 'Em and Caribbean Stud. The slots part of the division offers branded games such as Garfield, the Beach Boys and many more.

The systems division is a bit more complex in nature. Progressive Gaming has developed an RFID (radio-frequency identification) system to track players habits and gaming successes at the blackjack tables. The chips employed in the betting process are tagged with an RFID chip thus allowing the casino to know in real-time, who is betting at which tables and how much. The system falls under the CasinoLink Enterprise umbrella. The gaming industry is a natural collector of customer information to allow for profit-modeling on a per customer basis. PGIC has the patented products to supply the casinos with a soup-to-nuts solution.

The beauty of the model for PGIC is the recurring revenues. Once a blackjack table has been retrofitted for about $5000, PGIC collects a daily royalty based on usage of the table and the RFID-tagged chips. The margins on this are enormous and highly profitable. The casino-based slot machines are also on a recurring revenue model.

MOST NOTEWORTHY: The automotive sector was today's most noteworthy initiation:

• Prudential initiated the automotive manufacturers industry and automotive retail industry with Favorable ratings and the automotive parts and equipment industry with an Unfavorable rating. The firm initiated coverage on following stocks:
  
• Overweight-rated names included Autoliv Inc (NYSE: ALV), Group 1 Automotive, Inc (NYSE: GPI), Honda Motor Co, Ltd (NYSE: HMC), Johnson Controls, Inc (NYSE: JCI), Sonic Automotive, Inc (NYSE: SAH), & Toyota Motor Corp (NYSE: TM).
  
• Neutral Weight-rated names included AutoNation, Inc (NYSE: AN), DaimlerChrysler (NYSE: DCX), Magna International Inc (NYSE: MGA) and United Auto Group, Inc (NYSE: UAG).
  
• Underweight-rated names included Ford Motor Co (NYSE: F), General Motors Corp (NYSE: GM) and Gentex Corp (NASDAQ: GNTX).

OTHER INITIATIONS:

• Bernstein initiated JPMorgan Chase & Co (NYSE: JPM) with a Market Perform rating and $54 target.

• Lehman started Time Warner Cable Inc (NYSE: TWC) with a Neutral rating.

• Merriman initiated shares of Progressive Gaming International Corp (NASDAQ: PGIC) with a Buy rating, as the firm believes it is on the cusp of gaining meaningful market share of casino floors through its technologies and now is the time to get involved in shares.

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

MOST NOTEWORTHY: Some of today's notable downgrades were National City Corp (NCC), Aeroflex Inc (ARXX) and Compass Minerals International (CMP):

• Morgan Stanley cut National City Corp (NYSE: NCC) to Underweight from Equal-Weight with and $35 target to reflect increased losses on the company's remaining subprime loans and slower growth in the Midwest.

• AG Edwards downgraded Aeroflex Inc (NASDAQ: ARXX) to Sell from Buy to reflect the company's acquisition agreement.

• Matrix USA cut Compass Minerals Int'l (NYSE: CMP) to Strong Sell from Buy to reflect weak demand for deicing products.

OTHER DOWNGRADES:

• CIBC downgraded Pathmark Stores Inc (NASDAQ: PTMK) to Sector Perform from Outperformer based on the Great Atlantic & Pacific Tea Co (NYSE: GAP) acquisition.

• UBS cut Apria Healthcare Group Inc (NYSE: AHG) to Reduce from Neutral on valuation.

• Goldman Sachs downgraded Progressive Gaming International Corp (NASDAQ: PGIC) and Strategic Hotels & Resorts Inc (NYSE: BEE) to Sell from Neutral.

• Brean Murray cut Youbet.com (NASDAQ: UBET) to Hold from Buy based on increased competition concerns.

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