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.

Weight Watchers (WTW) overall option implied volatility is at 34, according to Track Data, above its 26-week average of 27 into its release of Q4 results on February 17. WTW rallied 2.5% after Jennifer Hudson appeared on Oprah Winfrey's show to discuss her weight loss using Weight Watchers' system.

Russell 2000 (IWM) overall implied volatility at 23; the 26-week average is 26.

Financial Select Sector (XLF) overall volatility at 22; the 26-week average is 25.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

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.

Yes, you read that title right. McDonald's (MCD) has just penned a deal with Weight Watchers (WTW) in New Zealand. The agreement will give McDonald's the right to associate the Weight Watchers logo with some Weight Watcher approved fast food items by including that logo on McDonald's menu boards and some other items.

A report from The Sydney Morning Herald indicates that some nutritionists and doctors are already raising concerns about the new marketing ploy. The report quotes Boyd Swinburn, from the Australian Society for the Study of Obesity at Deakin University, as stating, "Make no mistake, this is about selling more burgers and fries." Imagine that, a marketing strategy aimed at increasing sales. Someone needs to explain that concept to Mr. Swinburn.

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

• Abercrombie & Fitch Co. (ANF) lower Q3 results still topped expectations and sent shares higher.
• Applied Materials Inc. (AMAT) posted much better-than-expected Q4 earnings, the first profit in a year.
• AstraZeneca (AZN) received an analyst's downgrade due to concerns over its earnings prospects.
• Blackstone Group (BX) received an analyst's upgrade following the company's Q3 results.
• Blockbuster Inc. (BBI) widened its net loss in Q3 and revenue and same-stores sales declined.
• Clean Energy Fuels Corp. (CLNE) shares declined after its Q3 numbers fell short of expectations.
• Consolidated Water Co. Inc. (CWCO) earnings prospects for 2010 earned it an analyst upgrade.

Weight Watchers (WTW), the well-known provider of solutions to those who want to shed a few extra pounds, issued Q3 numbers on Tuesday. While losing inches is always a popular activity, that doesn't mean that the company will always see growth.

According to the corporate press release, Weight Watchers saw an 8% decline in net sales. Earnings per share came in at 68 cents on a diluted basis. That was only a penny better than the year prior. Management is certainly making the most of its revenues by keeping costs and expenses down, but it is obviously disappointing to shareholders when income expansion is dependent on belt-tightening.

While the release of economic data doesn't stop next week (see economic schedule highlights below), the earnings season does wind down dramatically. Most of the S&P 500 companies already have reported on the past quarter, which means dismal earnings news is largely behind us, at least for a while. About the only companies of note expected by analysts surveyed by Thomson Reuters to report falling earnings this week are Costco Wholesale Corp. (NASDAQ: COST), Wendy's/Arby's Group Inc. (NYSE: WEN), Foot Locker Inc. (NYSE: FL), Bank of Montreal (NYSE: BMO), and Steinway Musical Instruments Inc. (NYSE: LVB).

While PetSmart Inc. (NASDAQ: PETM) and Big Lots Inc. (NYSE: BIG) quarterly profits are expected to be about the same as a year ago, Liz Claiborne Inc. (NYSE: LIZ), Kenneth Cole Productions Inc. (NYSE: KCP), Ciena Corp. (NASDAQ: CIEN), and Trina Solar Ltd. (NYSE: TSL) are expected to have swung to losses in the most recent quarter.

Analyst upgrades:

• Baird upgraded Carlisle (NYSE:CSL) to Outperform from Neutral and lowered their target to $25 from $33 following the company's Q4 results citing attractive valuation and solid execution.
  
• Citigroup upgraded Talbots (NYSE:TLB) to Hold from Sell on valuation as they believe the company's cash flow is improving and does not expect the company to face bankruptcy in next three years.
  
• Jefferies upgraded shares of Spectra Energy (NYSE:SE) to Hold from Underperform on valuation following the company's Q4 results and raised their target price to $15 from $11.75.
• Costco (NASDAQ:COST) was upgraded to Buy from Neutral at UBS.
  
• AU Optronics (NYSE:AUO) and LG Display (NYSE:LPL) were upgraded to Buy from Neutral at Banc of America/Merrill.
  
• Alpha Natural (NYSE:ANR) was raised to Buy from Hold at Natixis.

MOST NOTEWORTHY: BioDelivery Sciences, Network Equipment, Barr Pharmaceuticals and Teva Pharmaceutical were today's noteworthy initiations:

• Merriman believes BioDelivery Sciences (NASDAQ:BDSI) is significantly undervalued given the positive results for BEMA Fentanyl and potential milestone payments of $60M, initiating shares with a Buy rating. They estimate fair value is in the $8-$10 range.
• Broadpoint believes Network Equipment (NYSE:NWK) is well-positioned for growth in the IP space, starting shares with a Buy rating.
• Banc of America started Barr Pharma (NYSE:BRL) with a Buy rating and $60 target, noting that the company's generic pipeline represents $30B in brand revenues and views Fosamax as the largest immediate opportunity. The firm also assumed coverage of Teva (NASDAQ:TEVA) with a Buy rating and $55 target, as they believe Teva's scale makes it the only generic company that can make a profit from aged generic products.

OTHER INITIATIONS:

• JP Morgan initiated Wintrust Financial (NASDAQ:WTFC) with a Neutral rating.
• Credit Suisse initiated Psychiatric Solutions (NASDAQ:PSYS) with an Underperform rating and $30 target.
• UBS started Weight Watchers (NYSE:WTW) with a Neutral rating and $51 target.

Most mergers are driven by the notion, sometimes wildly mistaken, that the combination will bring both a competitive advantage. Some pairs of companies, however, seem so intuitively right for one another, no bottom-line considerations should be allowed to interfere with their matrimony. Like a box of Oreos and a glass of milk, these two were meant for one another.

One aspect of American life that has been keeping up with the Dow Jones average is our waistlines. Since 1994, the percentage of adults considered overweight or obese has shot up from 55.8% to 65.9%, a bullish market (covered in barbecue sauce) indeed. In looking for partners that feed in this trough, I found two that, if merged, could make dough in both expanding and contracting economies.

The first, the obvious, is Weight Watchers International (NYSE: WTW). One of the oldest, and arguably the most successful weight loss company, Weight Watchers leverages peer- to-peer support to sell a full line of diet foods, books about weight loss and endorsed products. While its diet plan finished higher than those of other companies such as Jenny Craig in a Consumer Reports study, the fact is most customers don't succeed in maintaining their weight loss.

MOST NOTEWORTHY: Countrywide Financial (CFC), Hoku Scientific (HOKU), Lam Research (LRCX), Weight Watchers (WTW) and NutriSystem (NTRI) were today's more noteworthy downgrades:

• Friedman Billings downgraded Countrywide Financial (NYSE: CFC) to Underperform from Market Perform until credit stabilizes.

• Piper Jaffray downgraded Hoku Scientific (NASDAQ: HOKU) to Underperform from Outperform and sees several near-term risks, including competitive threats from larger and well-financed polysilicon start ups as well as financing risk.

• ThinkEquity downgraded Lam Research (NASDAQ: LRCX) to Source of Funds from Accumulate, expecting a recovery in the foundry segment but at 90nm, the nodes where Lam's market share is not high.

• Lehman downgraded Weight Watchers (NYSE: WTW) to Underweight from Equal Weight and NutriSystem (NASDAQ: NTRI) to Equal Weight from Overweight...

OTHER DOWNGRADES:

• First Albany downgraded Sketchers USA (NYSE: SKX) to Neutral from Buy.

• UBS downgraded Georgia Gulf (NYSE: GGC) to Reduce from Neutral.

• Bear Stearns cut GlaxoSmithKline (NYSE: GSK) to Underperform from Peer Perform.

• AG Edwards cut Peabody Energy (NYSE: BTU) to Hold from Buy.

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

Yesterday we learned that Starbucks (NASDAQ: SBUX) is taking another shot at the movie promotion business by pushing (for a cut of the action) the National Geographic movie "Arctic Tale." Starbuck's initial effort, last year's "Akeela and the Bee," had indifferent results.

While most of the big releases for 2007 already have commercial tie-ins, I thought about other companies that might make money by offering some targeted marketing. Perhaps

• Ratatouille -- KFC (Yum Brands, NYSE: YUM)
• The 40-year old Virgin -- Weight Watchers Intl (NYSE: WTW)
• Sicko -- The Church of Scientology
• Live Free or Die Hard -- Viagra (Pfizer, NYSE: PFE)
• Evan Almighty -- Chris Craft
• Transformers: The Mitt Romney Campaign
• The Simpsons Movie: Sylvan Learning
• Hairspray: Lane Bryant (Charming Shoppes, Inc., NASDAQ: CHRS)
• Hostel: Part II -- Hilton Hotels (NYSE: HLT)
• 1408 -- Hostelling International

And, as a special subscriber gift offer promotion,

• The Wall Street Journal (Dow Jones, NYSE: DJ) -- Citizen Kane

After researching the Volumetrics plan, I'm convinced it's among the best eating strategies yet. So does Consumer Reports.

Notice that the word "diet" is not mentioned. "Diet" implies temporary while "eating strategies" and another commonly used phrase "eating plan" implies permanent changes. The book "The Volumetrics Eating Plan" by Barbara Rolls, who is a professor in the department of nutritional sciences at Pennsylvania State University, is worth a read for anyone looking to take control of their nutrition for the long term rather than just lose a few pounds for the summer.

The runner-up is the review was the Weight Watchers International Inc. (NYSE: WTW) diet plan (I'm a fan of this one) and Jenny Craig also came in a very close third.

The rest? Well, do your homework and see if there are solid tracts of science behind whatever diet plan you choose -- and don't fall for the marketing hype or baseless celebrity endorsements.

It's easy to do.

From the recent Atkins Diet craze to the newest "Best Life Diet" that counts Oprah Winfrey as an endorser, there are many plans making claims to be the best.

As Consumer Reports shows, very few are worth the bother.

Tonight on CNBC's MAD MONEY, Jim Cramer talked about diet-plays for betting-to-win off the obesity of America. On weight loss, Cramer said there are ways to profit off the diet fad after the holidays. He wants to get into the weight-loss game before the companies report Q1 results. You can burn calories or cut down calories. There are some that earn major bucks and some to avoid.

As far as a health-club play, Cramer likes Lifetime Fitness (NYSE:LTM). He disagrees with a Prudential 'Underweight' rating; here's why he liked it and why it popped after he talked about it.

He discussed NutriSystems Inc. (NASDAQ:NTRI) as one that is just as dangerous to own now as it was before it recently got hit. He said they sell direct to the consumer instead of through retail outlets. He likes Weight Watchers International (NYSE:WTW). It has a better business model because it is like a profitable A-A. Here is the full note on that one. After Cramer panned it, NTRI fell 0.7% to $43.75 and that is after it fell 15% today. Its 52-week high is $76.33 and the low is $35.01. WTW popped over 1% to $54.77 in after-hours.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.

MOST NOTEWORTHY: Best Buy (BBY), Weight Watchers (WTW) and Texas Instruments (TXI) tops today's list of downgrades.

• Bernstein downgraded Best Buy Co, Inc. (NYSE: BBY) to Market Perform from Outperform, citing challenges ahead due to the deceleration of the TV cycle.
• Weight Watchers International, Inc. (NYSE:WTW) was downgraded to Neutral from Buy at Bank Of America after checks suggested soft North American attendance.
• Matrix USA downgraded Texas Instruments, Inc. (NYSE:TXI) to Hold from Buy on valuation.

OTHER DOWNGRADES:

• Goldman Sachs downgraded TradeStation Group, Inc. (NASDAQ:TRAD) to Neutral from Buy on valuation, citing preference to E*Trade (ET).
• Morgan Stanley downgraded the Integrated Oil Sector to In-Line from Attractive, citing slowing profit growth.
• MGI Pharma, Inc. (NASDAQ:MOGN) was downgraded by American Tech to Sell from Neutral, citing valuation and upcoming Aloxi risks for the move.
• Deutsche Bank downgraded Schering-Plough Corp. (NYSE:SGP) to Hold from Buy citing valuation.
• In addition, Deutsche Bank also downgraded Forest Laboratories, Inc. (NYSE:FRX) to Hold from Buy.

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