Analyst Upgrades

• Air Products (APD) to buy from hold at Deutsche Bank.
• Zimmer (ZMH) to outperform from neutral at RW Baird.
• SunPower (SPWRA) to buy from hold at Jefferies.
• Brocade (BRCD) to buy from hold at Wunderlich and at ThinkEquity.
• Duke Energy (DUK) to neutral from underperform at BofA/Merrill.
• NewStar Financial (NEWS) to outperform from market perform at Keefe Bruyette.
• Hormel Foods (HRL) to hold from sell at Soleil.
• Inspire Pharma (ISPH) to hold from sell at Duncan-Williams.
• Alnylam (ALNY) to buy from neutral at Roth Capital.
• Weight Watchers (WTW) to equal weight from underweight at Morgan Stanley.
• Raytheon (RTN) and Toreador Resources (TRGL) to outperform from sector perform at RBC Capital.

Analyst Upgrades

• Tyco Electronics (TEL) and Weight Watchers (WTW) to buy from neutral, and Smithfield Foods (SFD) to buy from underperform, at BofA/Merrill.
• Red Hat (RHT) to overweight from equal weight at Morgan Stanley.
• Gold Fields (GFI) to overweight from neutral at HSBC.
• Novartis (NVS) to outperform from neutral and GlaxoSmithKline (GSK) to neutral from underperform at Credit Suisse.
• Dollar General (DG) to buy from hold at ThinkEquity.
• Eagle Rock Energy (EROC) to outperform from sector perform at RBC Capital.

Analyst upgrades:

• BMO Capital upgraded Intercontinental Exchange (ICE) to Outperform from Market Perform based on valuation and the company's growth outlook. The firm has a price target of $125 on the stock.
• Morgan Keegan upgraded WESCO (WCC) to Outperform from Market Perform ahead of Thursday's earnings report based on valuation and expectations for stronger than expected sales.
• Keefe Bruyette upgraded Bank of Marin (BMRC) to Outperform from Market Perform with a $40 price target following the company's Q2 results.
• BHP Billiton (BHP) was upgraded to Overweight from Equal Weight at Barclays.
• PPG Industries (PPG) was upgraded to Overweight from Equal Weight at Morgan Stanley.
• Schnitzer Steel (SCHN) was upgraded to Buy from Neutral at UBS.

Analyst upgrades:

• ThinkEquity upgraded Yahoo! (YHOO) to Buy from Hold based on valuation, checks that indicate Q2 display/search improvement, search stabilization, improved cost structure, and share repurchases.
• Societe Generale upgraded Roche Holding (RHHBY) to Buy from Hold based on expectations Avastin will be approved in breast cancer, despite negative FDA briefing documents.
• FBR Capital upgraded Atheros (ATHR) to Outperform from Market Perform based on valuation and positive checks that indicate powerline networking chips are gaining traction in China. The firm has a $43 price target on the stock.
• Juniper (JNPR) was upgraded to Buy from Hold at Canaccord.
• Ultimate Software (ULTI) was upgraded to Buy from Hold at Roth Capital.
• Liberty Property Trust (LRY) was upgraded to Market Perform at Wells Fargo.

Analyst downgrades:

• Auriga downgraded ADC Telecomm (ADCT) to Hold from Buy following the company's merger announcement with Tyco Electronics (TEL).
• TD Newcrest expects Manulife's (MFC) Q2 loss to be worse than expected due to the impact from lower interest rates. The firm cut shares to Hold from Buy.
• Goldman downgraded Perrigo (PRGO) to Sell from Neutral and lowered its target to $50 from $61. The firm cites relative valuation for the downgrade. Target to $50 from $61.
• F5 Networks (FFIV) was downgraded to Hold from Buy at Canaccord.
• Anglo American (AAUKY) and BHP Billiton (BHP) were downgraded to Neutral from Outperform at Credit Suisse.

Analyst initiations:

• QKL Stores (QKLS) was initiated with a Buy rating and $7 price target at Global Hunter.
• Rodman & Renshaw started Rick's Cabaret (RICK) with an Outperform rating.

Analyst Upgrades

• Janney Montgomery upgraded Microsoft (MSFT) to buy from neutral with a $30 price target, citing valuation and expectations for strong Q4 results.
• UBS upgraded SanDisk (SNDK) to buy from neutral based on favorable pricing and mobile design win momentum. The firm raised its target to $55 from $46.
• BMO Capital upgraded Medtronic (MDT) to outperform from market perform based on valuation and its product pipeline. The firm has a $48 price target on the stock.
• Lorillard (LO) and Qualcomm (QCOM) were upgraded to conviction buy from buy at Goldman.
• Monsanto (MON) was upgraded to buy from hold at Citigroup.
• FedEx (FDX) was upgraded to buy from hold at BB&T.

Analyst Upgrades

• Auriga upgraded Allscripts (MDRX) to buy from hold to reflect valuation and potential synergies from the company's pending merger with Eclipsys (ECLP). The firm upped its target price for shares to $20 from $19.
• SunTrust upgraded Newell Rubbermaid (NWL) to buy from neutral based on completion of its turnaround plan, stabilizing end markets and favorable comparisons. The firm has a $25 price target on the stock.
• Morgan Joseph upgraded C.R. Bard (BCR) to buy from hold based on valuation and upside to estimates from the share buyback program. The firm has a $97 price target on the stock.
• Shire (SHPGY) was upgraded to buy from hold at Lazard Capital.
• Onyx Pharma (ONXX) was upgraded to outperform from market perform at BMO Capital.
• AvalonBay (AVB) was upgraded to neutral from sell at UBS.

U.S. stock market futures were higher Wednesday morning as upbeat earnings report from late Tuesday and early Wednesday boosted sentiment. Meanwhile, investors also awaited the Federal Open Market Committee policy statement later in the day as well as President Barack Obama state of the union address.

As Fed chairman Bernanke fights for another term at the helm of the federal bank, the Federal Reserve may take a chance the housing market can stage a comeback without its support and announce today it will stick to the plan to end a $1.25 trillion program of mortgage-debt purchases in March. The Fed will release its policy statement at 2:15 p.m. Eastern.

Analyst upgrades:

• Goldman upgraded General Electric (NYSE: GE) to Buy from Neutral and raised its target to $15 from $13 citing reports that U.S. House Financial Services Chairman Barney Frank has indicated regulatory reform will not require a separation of GE Capital.
• Syntel (NASDAQ: SYNT) was upgraded to Market Perform from Underperform by Wells Fargo. The firm upgraded the stock following the company's much better than expected Q2 EPS.
• Canaccord upgraded USANA (NASDAQ: USNA) to Outperform from Market Perform citing the strong Q2 report and earnings momentum. The firm has a $40 target on the stock.
• Royal Caribbean (NYSE: RCL) was upgraded to Equal Weight from Underweight at Barclays.
• Equity Residential (NYSE: EQR) was upgraded to Market Perform from Underperform at FBR Capital.
• Tyco Electronics (NYSE: TEL) was upgraded to Buy from Neutral at UBS.
• Yum! Brands (NYSE: YUM) was upgraded to Overweight from Equal Weight at Morgan Stanley.

Analyst upgrades:

• Keefe Bruyette upgraded BB&T (NYSE: BBT) to Market Perform from Underperform as it believes downside risk has been reduced following the company's capital raise. The firm raised its target price to $23 from $15.
  
• Janney Montgomery upgraded FEI Company (NASDAQ: FEIC) to Buy from Neutral on expectations margins will improve and various country stimulus packages will provide benefits in 2010. The firm has a $31 target on the stock.
  
• Citigroup upgraded Tyco Electronics (NYSE: TEL) to Buy from Hold as it believes automotive headwinds are priced in and the company's long-term fundamentals are intact. The firm raised its target price to $25 from $19.
• Barrick Gold (NYSE: ABX) was upgraded to Outperform from Sector Perform at RBC Capital.
  
• J.B. Hunt (NYSE: JBHT) was raised to Overweight from Equal Weight at Stephens.
  
• Roper Industries (NYSE: ROP) was upgraded at Oppenheimer to Outperform from Perform.

I am the Global Editor at MoneyShow.com and each week I interview an investing expert. This week, I spoke with Daniel J. O'Keefe, portfolio manager of Artisan International Value Fund and portfolio co-manager of Artisan Global Value Fund, who is taking a long-term look and finding opportunities in undervalued companies.

Q. Daniel, during this period of global economic crisis have you been a steady buyer of equities in Artisan Global Value Fund (ARTGX)? If so, why and what have you been purchasing?

A. As almost all our stocks are falling further from their fair value targets, the hurdle for new investments keeps moving up. So, a good portion of our buying has been in existing holdings. For example, Bank of New York (NYSE: BK), a holding in Artisan Global Value Fund, has been extremely volatile. Not a traditional bank, BK makes most of its revenues and profits from capital markets, related fee income, and a significant money market business. BK has not been immune to the credit concerns of the markets, but its exposure to low quality commercial paper has thus far been manageable. We have taken advantage of these concerns to add to our position.

Purchases we made in the third quarter include Tyco Electronics (NYSE: TEL), a leading [Bermuda-based] manufacturer of electronic connectors used in everything from cell phones and computers to automobiles. This is an attractively valued business with high margins, attractive returns on capital, and good cash flow generation.

Tyco Electronics (NYSE: TEL) provides engineered electronic components, network devices and telecommunications systems to customers in the automotive, appliance, aerospace, defense, telecom, computer and consumer electronics industries. In all, the firm manufactures approximately 500,000 products. It was one of the two daughter companies formed when Tyco International (NYSE: TYC) separated its electronics and healthcare groups from its core security and engineered products operations.

Tyco Electronics surprised the Street earlier in the month, when it reported fiscal Q4 EPS of 59 cents and revenues of $3.62 billion. Analysts had been expecting 54 cents and $3.43 billion. The CEO noted, "Our strong sales growth was largely due to continued strength in our international markets, which account for more than 60 percent of our sales, along with another very strong quarter in our Undersea Telecommunications business." Management also guided Q1 EPS to 56-58 cents (54 cent consensus), Q1 revenues to $3.53-3.60 million ($3.35B consensus) and FY08 EPS to $2.40-2.50 ($2.35 consensus).

MOST NOTEWORTHY: American Eagle, CVS/Caremark, Office Depot, WPP Group and Pixelworks were today's noteworthy upgrades:

• American Eagle Outfitters Inc (NYSE: AEO) was upgraded to Outperform from Market Perform at Wachovia, as the firm believes momentum from a strong Spring/Summer can carry into the fall/Holiday seasons.
  
• JP Morgan views CVS/Caremark Corporation (NYSE: CVS) as the most sophisticated healthcare offering, the largest PBM, and has first mover advantage. The firm upgraded shares to Overweight from Neutral.
  
• JP Morgan also upgraded shares of Office Depot Inc (NYSE: ODP) to Overweight from Neutral based on valuation and potential turnaround.
  
• Morgan Stanley upgraded WPP Group (NASDAQ: WPPGY) to Overweight from Equal Weight as they believe the company can still meet its profit forecasts and margin goals in a slowing global economy.
  
• Jefferies upgraded shares of Pixelworks Inc (NASDAQ: PXLW) to Hold from Underperform on valuation as they no longer believe the risk/reward favors shorting at these levels.

OTHER UPGRADES:

• Stifel upgraded Tempur Pedic International (NYSE: TPX) to Buy from Hold.
  
• Merrill upgraded Tyco Electronics (NYSE: TEL) to Buy from Neutral.
  
• BB&T upgraded Celanese Corporation (NYSE: CE) to Buy from Hold.
  
• CIT Group Inc (NYSE: CIT) was upgraded to Outperform from Neutral at Credit Suisse.

MOST NOTEWORTHY: Aerospace stocks, WuXi Pharma, Myriad Genetics, Cypress Bioscience and Knology were today's noteworthy initiations:

• LYON initiated shares of aerospace stocks including Goodrich Corporation (NYSE: GR), TransDigm Group Inc (NYSE: TDG) and Triumph Group Incorporated (NYSE: TGI) with Add ratings and a $74 target, $45 target and $90 target, respectively.
  
• WuXi Pharmatech (NYSE: WX) was started with a Hold rating and $29 target at Jefferies on valuation. JP Morgan started shares with a Neutral rating and Credit Suisse initiated shares with an Outperform rating.
  
• Myriad Genetics Inc (NASDAQ: MYGN) was started with a Hold rating and $50 target at Citigroup, as the firm is cautious on the Phase III Flurizan results and does not recommend putting new money here at these levels.
  
• Citigroup also initiated shares of Cypress Biosciences Inc (NASDAQ: CYPB) with a Buy rating and $22 target as the firm believes Milnacipran has sufficient database for approval and is capable of gaining meaningful market share as firstline therapy.
  
• Knology Inc (NASDAQ: KNOL) was initiated with a Buy rating and $25 target at BWS Financial, as the firm believes the company's growth potential is greater than other cable companies through a business plan that allows it to have operations in all regions of the U.S.

OTHER INITIATIONS:

• Wachovia resumed coverage of Liberty Media Corporation (NASDAQ: LCAPA) with an Outperform rating.
  
• Northwest Airlines Corporation (NYSE: NWA) and Delta Air Lines Inc (NYSE: DAL) were initiated with Overweight ratings at JP Morgan.
  
• Thomas Weisel started shares of Tyco Electronics (NYSE: TEL) with a Market Weight rating.
  
• Goldman initiated shares of Electronic Arts Inc (NASDAQ: ERTS) and Activision Inc (NASDAQ: ATVI) with Buy ratings and THQ Inc (NASDAQ: THQI) with a Neutral rating.

MOST NOTEWORTHY: The exchange sector, Progenics Pharma, Tyco Electronics and PharMerica were today's noteworthy initiations:

• Keefe Bruyette initiated coverage on Exchange Sector: The firm started shares of CME Group Inc (NYSE: CME), NYMEX Holdings Inc (NYSE: NMX) and NYSE Euronext Inc (NYSE: NYX) with Outperform ratings and a $669 target, $147 target and $90 target, respectively. The firm also started shares of Investment Technology Group (NYSE: ITG), Nasdaq Stock Market Inc (NASDAQ: NDAQ) and IntercontinentalExchange Inc (NYSE: ICE) with Underperform ratings and a $47 target, $36 target and $158 target, respectively, and shares of Knight Capital Group (NASDAQ: NITE) with an Underperform rating and $13 target.
  
• Progenics Pharmaceuticals (NASDAQ: PGNX) was added to Friedman Billings' Top Picks list and its Outperform rating was maintained. The firm has a high degree of confidence in the success of the MNTX Ph III studies in post-operative ilieus, as well as the FDA approval of the subcutaneous injection in terminally ill patients with opiod-induced constipation around the 1/31/07 PDUFA date.
• RBC believes margin expansion will drive long-term appreciation in Tyco Electronics Ltd (NYSE: TEL) and started shares with an Outperform rating and $41 target.
• PharMerica Corporation (NYSE: PMC) was initiated with an Underperform rating at Bear Stearns. The firm believes PMC will be pressured by customer losses and generic reimbursement cuts and sees shares trading in $12-$13 range.

OTHER INITIATIONS:

• Ryanair Holdings (NASDAQ: RYAAY) was initiated with a Market Outperform rating at Avondale.u
• Banc of America initiated shares of Town Sports International (NASDAQ: CLUB) with a Sell rating and $15 target.
  
• Goldman started shares of Genesis Lease Ltd (NYSE: GLS) and Aircastle Ltd (NYSE: AYR) with Neutral ratings.

Tyco International Ltd. (NYSE:TYC) shares have performed dismally since it completed its spin-off of Tyco Electronics Ltd. (NYSE:TEL) and Covidien Ltd. (NYSE:COV). In fact, those have been poor performers as well. It isn't easy being one of the few naysayers ahead of a major event like this, but there are frequently too many conflicted reports out there. Does anyone expect that the large investment banking firms facilitating that deal or near-term financing would actually post a 'HIGH CAUTION" alert on any of the companies? Exactly.

Before the spin-off was implemented, I noted a "phantom premium" in Tyco's stock because the investing world was just too much in love with spin-offs, mergers, and private equity at the time. Interestingly enough, this shakeout may be going a bit too far as far as the overall values of the three units now. There is more data that needs to be crunched to verify this, but next week subscribers of the Special Situation Investing Newsletter will receive a newsletter with a tie of a company to one of the remaining ex-Tyco Newco stocks.

We ran a basket analysis this morning and showed that the ex-Tyco group as a whole was down twice as much as the general markets off of the July highs. That was also before the drop in all three stocks this morning. Mergers and special situations are not dead by any means. But now the funny-money deals are going to be a thing of the past. Deals might even have to make sense other than the greater fool theory from here on out. The good news is that the stupidity in mergers and special situations has been flushed out of the market and analysis doesn't have to worry about irrational conditions clouding up the picture.

Jon Ogg is a partner in 24/7 Wall St., LLC; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.