Analyst Upgrades

• Citigroup assumed coverage of Illinois Tool Works (ITW) and upgraded shares to buy from hold with a $52 price target. Citi cites valuation and the company's successful execution for the rating change.
• UBS upgraded Rowan Companies (RDC) to buy from neutral based on better-than-expected dayrates in the high specification jack-up market. The firm raised its price target to $42 from $28.
• UBS also upgraded NetLogic (NETL) to buy from neutral and keeps a $33.50 target on the stock. The firm upgraded shares based on valuation and solid long-term outlook.
• AvalonBay (AVB) and BRE Properties (BRE) were upgraded to neutral from underperform at Macquarie.
• Covance (CVD) was upgraded to equal weight from underweight at Morgan Stanley.
• Reynolds American (RAI) was upgraded to neutral from underperform at BofA/Merrill.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Amazon.com Inc. (NASDAQ: AMZN) reported strong Q3 results but warned of softness ahead.
• Amgen Inc. (NASDAQ: AMGN) beat earnings expectations and lifted its full-year forecast.
• AT&T Inc. (NYSE: T) Q3 results were worse than expected despite the iPhone's popularity.
• Broadcom Corp. (NASDAQ: BRCM) beat expectations but lowered its revenue guidance.
• Dice Holdings Inc. (NYSE: DHX) reported solid Q3 results despite the financial crisis.
• E*Trade Financial Corp. (NASDAQ: ETFC) widened its Q3 net loss and revenues shrank.
• Gannett Inc. (NYSE: GCI) just missed earnings estimates as advertising revenues declined.
• Hasbro Inc. (NYSE: HAS) posted solid Q3 results that topped analysts' expectations.
• Mattel Inc. (NYSE: MAT) missed Q3 earnings expectations despite popularity American Girl.
• McDonald's Corp. (NYSE: MCD) easily beat Q3 earnings estimates and lifted its dividends.
• Netflix Inc. (NASDAQ: NFLX) posted strong Q3 numbers but warned of slowing subscriber growth.
• Pfizer Inc. (NYSE: PFE) Q3 profits tripled due to cost cutting and sales of pain pill Lyrica.
• Potash Corp. of Saskatchewan (NYSE: POT) topped earnings estimates, sending shares higher.
• Reynolds American Inc. (NYSE: RAI) posted Q3 results that topped analysts' expectations.
• Sony Corp. (NYSE: SNE) slashed its earnings forecast on weakness in flat panel TVs and digital cameras.
• Telefonaktiebolaget LM Ericsson (NASDAQ: ERIC) reported better-than-expected Q3 results.
• 3M Co. (NYSE: MMM) solid Q3 results topped Wall Street expectations and it offered full-year outlook.
• VMWare Inc. (NYSE: VMW) Q3 earnings surged on strong growth in services revenue.

For more earnings highlights from this week, see Apple, Boeing, Microsoft, Yahoo!, UPS, American Express and others.

Watch for upcoming quarterly reports from Verizon (NYSE: VZ), Estée Lauder (NYSE: EL) , US Steel (NYSE: X), Aetna (NYSE: AET), Procter & Gamble (NYSE: PG), Qwest (NYSE:Q), Comcast (NASDAQ: CMCSA), Kellogg (NYSE: K), Kraft Foods (NYSE: KFT), MetLife (NYSE: MET), Moody's (NYSE: MCO), Office Depot (NYSE: ODP), Avon (NYSE: AVP), CBS (NYSE: CBS), CVS Caremark (NYSE: CVS), Sun Microsystems (NASDAQ: JAVA), Eastman Kodak (NYSE: EK), Motorola (NYSE: MOT), Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), Washington Post (NYSE: WPO).

Visit AOL Money & Finance for more earnings coverage.

Camel, which is an R.J. Reynolds Tobacco company, which is owned by Reynolds American Inc (NYSE: RAI), has a new brand of cigarettes out -- Camel No. 9 -- which are targeted at the adult female audience.

I was blissfully unaware of the new brand, being a male non-smoker. However, thanks to a bit of negative press, I am now conscious of Reynold's "cynical ploy" to lure young females to the world of smoking. Fortunately for Reynold's, so are a host of young women that read the newspaper, because while I may not be intrigued by a cigarette that is "chic, a little European, maybe a little Sex in the City," I am willing to bet more of the girls that read that article will be than not. It is a classic case of the effectiveness of negative publicity.

The worst part is that I am only increasing the new brand's awareness with each keystroke. But I digress.

The bottom line is that no matter how many times America's youth is warned about the dangers of cancer from smoking, it will fall on deaf ears that only read the words "chic," "sleek" and "sophisticated" from the very same negative article. And that spells profit for tobacco companies such as Reynolds America.

MOST NOTEWORTHY: Today's most noteworthy upgrades were Reynolds American, Inc (RAI), PRA International (PRAI), Wendy's International (WEN), 3M Company (MMM) and PMC-Sierra, Inc (PMCS):

• JP Morgan upgraded shares of Reynolds American Inc (NYSE: RAI) to Neutral from Underweight to reflect the company's solid 2007 outlook and improved cigarette mix.

• Baird raised PRA International (NASDAQ: PRAI) to Neutral from Underperform.

• Wendy's International (NYSE: WEN) was upgraded to Neutral from Underweight with a $26 target at Prudential.

• 3M Company (NYSE: MMM) was upgraded to Overweight from Neutral at Prudential...

OTHER UPGRADES:

• Bear Stearns upgraded shares of ArvinMeritor, Inc (NYSE: ARM) to Outperform from Underperform.

• Roth Capital raised WPT Enterprises (NASDAQ: WPTE) to Hold from Sell.

• Soleil upgraded the semiconductor sector to Overweight from Underweight, believing a recovery in fundamentals is likely over the next 6 months and expecting shares to outperform over the next 12 to 18 months.

• First Albany upgraded shares of Xilinx, Inc (NASDAQ: XLNX) to Buy from Neutral to reflect operating leverage and the end of the inventory concern.

• Wachovia upgraded shares of Agco Corp (NYSE: AG) to Market perform from Outperform.

• Deutsche Bank raised Dover Corp (NYSE: DOV) to Buy from Hold.

• Corning (NYSE: GLW) was upgraded at Goldman to Buy from Neutral with a $31 target.

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

Numbers are Actual vs. Estimate

Excellent Reports

• InterActiveCorp (NASDAQ: IACI) 67c vs. 53c
• Retailing revenue increased to offset a lower price point average, and a higher average return rate. International revenue increased slightly, but profits were hurt by higher operating expenses. Ticketing volume increased as ticket sales rose 4% on 7% higher overall revenue per ticket.
  

• National-OilWell Varco Inc (NYSE: NOV) $1.35 vs. $1.06
• High energy prices stirred demand for drilling equipment which created a backlog of capital equipment orders for the Rig Technology segment.
  

• Electronic Data Systems Corporation (NYSE: EDS) 47c vs. 36c
• "On balance," said chairman and CEO Mike Jordan, "This was the strongest quarter... since I joined the company in 2003." Performance was driven by $7.6B in fourth quarter contracts, up 43% from the previous year.

According to a Dow Jones report yesterday, the decisions to three pending Star Scientific, Inc. (NASDAQ: STSI) summary-judgment motions in the company's patent-infringement lawsuit against Reynolds American Inc's (NYSE: RAI) R.J. Reynolds Tobacco Co. will be available on tomorrow.

The patent-infringement suit has been ongoing since 2001, when Star Scientific filed against Reynolds, alleging that Reynolds had violated the company's process to reduce the level of nitrosamines - a carcinogenic toxin - in tobacco.

Star Scientific's stock rose from $3.39 to $4.40 yesterday on the news the decisions had been reached, and could rise again significantly should those decisions go its way. Additionally, if Reynolds is ordered to pay a significant enough sum, the tobacco giant may decide to simply buy out Star Scientific rather than pay a hefty patent-infringement fine.

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

U.S. stocks closed flat Wednesday as investors and traders digested better-than-expected earnings & guidance from JP Morgan Chase & Co. (NYSE:JPM) and McDonald's Corp. (NYSE: MCD). U.S. Federal Reserve Chairman Ben Bernanke will testify before the U.S. Congress on Thursday. The Dow closed up 0.21%, NASDAQ 100 down 0.08%, S&P 500 down 0.73%, and the 10-year bond rose to 4.787%. Volatility Index S&P 500 Options-VIX was down 0 .05 to 10.69.

Microsoft Feb Option Implied Volatility Increases Iinto Product Launches & EPS

Microsoft Corp. (NASDAQ: MSFT) will report EPS on 1/25. MSFT launches Vista, Office 2007 and exchange Server 2007 on 1/30. Goldman Sachs said: "We are raising our 12-month target to $36 from $33 largely due to increased confidence in upcoming new product cycles driving earnings upside and lower beta." MSFT February option implied volatility of 25 is above its 26-week average of 21, according to Track Data, suggesting larger price risk.