Calyon upgraded major network carriers based on falling oil prices and capacity cuts. The analyst is positive over the next 12 months but cautious short-term given the uncertain economy, and volatile markets and oil prices. AMR Corp (NYSE: AMR) and Delta Air (NYSE: DAL) were upgraded to Add from Neutral and UAL Corp (NASDAQ: UAUA) was raised to Neutral from Reduce.
Ryanair (NASDAQ: RYAAY) was upgraded at Citigroup to Buy from Hold.
Cowen lifted Biogen Idec (NASDAQ: BIIB) to Outperform from Neutral.
JP Morgan upgraded Choice Hotels (NYSE: CHH) to Neutral from Underweight following the better-than-expected Q3 report.
Oppenheimer upgraded shares of Integra LifeSciences (NASDAQ: IART) to Outperform from Perform on valuation, the company's minimal exposure to economic conditions, and expectations for margin improvement and a rebound in organic growth.
As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.
Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.
Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
Sherwin-Williams (NYSE: SHW) shares are trading higher today after the Rhode Island Supreme Court overturned a $2.4 billion ruling against SHW and two other former lead-paint producers that would have ordered the companies to inspect and clean thousands of homes built before 1980 that were likely to contain lead paint. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SHW.
After hitting a one-year high of $73.96 last July, the stock hit a one-year low of $45.89 yesterday. SHW opened this morning at $48.29. So far today the stock has hit a low of $45.82 and a high of $48.86. As of 11:55, SHW is trading at $47.36, up $1.43 (3.1%). The chart for SHW looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just seven weeks as long as SHW is above $55 at August expiration. Sherwin-Williams would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
MOST NOTEWORTHY: PHH Corp., VF Corp. and Dialysis Corp. of America were today's noteworthy initiations:
PHH Corp (PHH) was initiated with an Outperform rating and $25 target at Keefe Bruyette. The firm finds the stock inexpensive at current levels and believes the company's management team is strong and mortgage operations are improving.
Baird is positive on VF Corp's (VFC) sales and EPS growth, brand portfolio strength, and global distribution opportunities. Shares were assumed with an Outperform rating and $90 target.
Stanford started Dialysis Corp of America (DCAI) with a Buy rating and $10 target and believes the company is worth more to a strategic buyer, which they feel could drive revenue per treatment and margins higher.
OTHER INITIATIONS:
Merrill initiated Sherwin-Williams (SHW) with an Underperform rating.
Vail Resorts (MTN) was assumed with a Buy rating and $59 target at Banc of America.
Goldman started Patterson-UTI Energy (PTEN) with a Neutral rating and $35 target.
Sherwin-Williams (NYSE: SHW) shares are falling after the company cut its second-quarter earnings estimate to between $1.40 and $1.50 per share, down from a range of $1.45 to $1.60 per share. SHW also cut its FY2008 forecast to a range of $3.60 to $4.10 per share, down from a range of $4.70 to $4.85 per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on SHW.
After hitting a one-year high of $55.90 last April, the stock hit a one-year low of $33.54 in January. This morning, SHW opened at $51.73. So far today the stock has hit a low of $51.68 and a high of $54.80. As of 12:15, SHW is trading at $54.34, down $1.35 (-2.4%). The chart for SHW looks bullish and steady, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $60 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 12.4% return in seven weeks as long as SHW is below $60 at July expiration. Sherwin Williams would have to rise by more than 10% before we would start to lose money. Learn more about this type of trade here.
MOST NOTEWORTHY: Full House Resorts, Starent Networks and Capital Trust were today's noteworthy initiations:
Morgan Joseph said Full House Resorts Inc.'s (AMEX: FLL) valuation does not reflect the present value of its tribal management contract with the FireKeepers Casino. Shares were initiated with a Buy rating and $3.50 target.
Starent Networks Corporation (NASDAQ: STAR) was assumed with an Overweight rating at Thomas Weisel. The firm said STAR offers a compelling risk/reward profile given strong gross margins and expanding operating margins.
Keefe Bruyette initiated Capital Trust Inc. (NYSE: CT) with a Market Perform rating and $30 target, and believes the expected deterioration of commercial real estate fundamentals is likely to remain a headwind for valuations of the shares.
MOST NOTEWORTHY: WuXi Pharma, ExxonMobil and LifePoint Hospitals were today's noteworthy upgrades:
Jefferies upgraded shares of WuXi Pharma (NYSE: WX) to Buy from Hold as they believe the risk/reward is much improved following the recent weakness. They think the company's 2008 guidance is achievable.
Credit Suisse raised ExxonMobil (NYSE: XOM) to Outperform from Neutral as they believe the rise in crude oil means analyst estimates are too low.
Goldman sees upside to hospital stocks given low valuations and expectations. The firm upgraded LifePoint Hospitals (NASDAQ: LPNT) to Buy from Neutral and named it a top pick along with previous top pick Cardinal Health (NYSE: CAH).
OTHER UPGRADES:
Goldman added NDS Group (NASDAQ: NNDS) to their Conviction Buy List and upgraded shares to Buy from Neutral.
Morgan Stanley raised Boeing (NYSE: BA) to Overweight from Equal Weight.
3M's adjusted fourth-quarter profit exceeded Wall Street expectations even though earnings fell from year-ago results, which included a one-time gain. Net income was $851 million, or $1.17 per share, compared to $1.18 billion, or $1.57 per share, in the year-ago period. Excluding a charge of $12 million, or 2 cents per share, profit rose to $1.19 per share. Analysts surveyed by Thomson Financial had expected earnings of $1.17 per share.
Sales rose 7% to $6.21 billion from $5.78 billion last year, and beat analyst estimates of $6.14 billion. For the year, profit rose 11% to $4.1 billion, or $5.60 per share, from $3.95 billion, or $5.06 a share, in 2006. Annual revenue rose 7% as well, to $24.5 billion from $22.9 billion in 2006.
Shares rose .75% on Tuesday to close at $78.02. Shares had fallen to a 52-week low of $72.05 last week.
Sherwin-Williams Co. (NYSE: SHW) is engaged in the manufacture, distribution, and sale of paint, coating and other related products. SHW is recently up $0.95 to $65.68 on unconfirmed buyout chatter. SHW has a market cap of $8.5 billion with long term debt of $292 million. SHW call option volume of 8,040 contracts compares to put volume of 328 contracts. SHW October option implied volatility of 36 is above its 26-week average of 28 according to Track Data, suggesting larger risk.
Take-Two Interactive Software(NASDAQ: TTWO), an interactive entertainment software game developer, is recently up 33 cents to $17.26. Activist shareholders have been involved in TTWO over the last eleven-months. Unconfirmed and renewed buyout chatter is circulating about TTWO this morning. TTWO call option volume of 2,199 contracts compares to put volume of 225 contracts. TTWO call option implied volatility is at 52; puts are at 61 near its 26-week average of 55 according to Track Data, suggesting non-directional risk.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Some advertising logos stand the test of time quite nicely. You know the one showing a bucket of paint being poured on the globe? Sure you do. It's the one featuring the advice "Cover the Earth". It was patented by a Cleveland firm in 1906 and has apparently worked very well for them. The company is now the biggest paint manufacturer in the U.S. and the second biggest in the world.
Sherwin-Williams Company (NYSE: SHW) makes coatings and related materials for professional, industrial, commercial and retail customers. Products include a variety of paints, finishes, coatings, applicators and varnishes sold under the names Dutch Boy, Krylon, Martin-Senour, Red Devil, Sherwin-Williams, Thompson's and Minwax. The firm operates more than 3,000 North American retail stores and about 200 international wholesale outlets. Products are also sold to retailers, dealers, jobbers, licensees, and various third party distributors.
The company pleased investors last week, when it reported Q2 EPS of $1.52 and revenues of $2.2 billion. Analysts had been expecting $1.44 and $2.21 billion. Management also guided Q3 EPS to $1.45-$1.55 ($1.48 consensus), Q3 revenues to $2.2-$2.24 billion ($2.21B consensus) and FY07 EPS to $4.60-$4.70 ($4.60 consensus). The company acquired 1.3 million shares of its common stock through open market purchases during Q2 and had remaining authorization to repurchase 8.171 million more.
Think iron pellets. If you do, you won't be alone. Lots of options folk think they've caught a takeover candidate, and have been picking up bullish options all over. Is it steel industry consolidation fever? Most probably. Rio Tinto plc ADS (NYSE: RTP) and Brazil's CVRD have been named as predators. Speculation about the company's future actually began late last summer for a company with a market cap of just $3B, which happens to be the largest producer of iron ore pellets in all of North America, and a key part of producing steel. The stock has been heading up for about seven months now. Makes sense. NORFOLK SOUTHERN CORPORATION (NYSE: NSC)
Higher and higher goes the stock for a few reasons: Railroad stocks look to be buyout candidates, and some analysts are focused on the Southern, the fourth largest railroad in the U.S. The other reason? Mr. Warren Buffett also owns 6.4M shares worth over $300M. Good enough?
There's speculation that the Inns are in buyout mode. The stock recently hit a 52-week high, and has been going up for about six weeks. Some who follow the company think it's definitely worth more than the $20 a share range.
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Analyst upgrades:
As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from 
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Sherwin-Williams Co.
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