Analyst upgrades:

• Empire District Electric (NYSE:EDE) was upgraded to Buy from Hold at Jefferies on valuation. The firm raised its target to $18.50 from $16.
  
• Actividentity (NASDAQ:ACTI) was upgraded to Buy from Hold at Soleil and its target was increased to $3.25 from $2.50 on valuation.
  
• Merrill upgraded Phototronics (NASDAQ:PLAB) to Buy from Underperform citing cost reductions, the amended credit agreement, and expectations for growth after the January quarter.

Analyst downgrades:

• Roth Capital downgraded RTI Biologics (NASDAQ:RTIX) to Hold from Buy and lowered its target to $3 from $6 following its negative Q4 negative pre-announcement.
  
• Morgan Joseph said Ceradyne (NASDAQ:CRDN) will not ship any new X-SAPI body armor in Q4 due to a contract protest by a competitor. The Army has decided to seek new bids but CRDN management expects to win a similar order in late January with deliveries expected in late 1Q09. Shares were downgraded to Hold from Buy.

Analyst initiations:

• William Blair initiated Grand Canyon (NASDAQ:LOPE) with an Outperform rating. The firm believes the company has strong growth prospects amid a favorable industry backdrop.
  
• Keefe Bruyette resumed coverage of Assured Guaranty (NYSE:AGO) with a Market Perform rating and $12.50 target, citing financial guaranty market instability.
• Capital Source (NYSE:CSE) was reinstated with a Neutral rating at Credit Suisse.
  
• Yongye Biotechnology (OTC:YGYB) was initiated with a Buy rating and $3.50 target at Roth Capital.

Assured Guaranty (NYSE: AGO) is recently down $8.77 to $9.95. Moody's said it placed AGO debt under review for possible downgrade. AGO has a triple-A-rated credit rating.

Wilbur Ross announced on Feb. 29 the agreement to invest $1 billion in AGO, a Bermuda-based holding company that provides credit enhancement products. AGO August option implied volatility of 195 is above its 26-week average of 69 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MOST NOTEWORTHY: Texas Instruments, SanDisk and Brocade were today's noteworthy downgrades:

• Merrill Lynch downgraded shares of Texas Instruments (NYSE: TXN) to Neutral from Buy after the company reported lower-than-expected Q3 results due to concerns regarding elevated inventory levels and rising raw material and labor costs. Merrill lowered their target to $27 from $32.
  
• Citigroup cut SanDisk (NASDAQ: SNDK) to Sell from Hold after the company reported a Q2 miss and offered lower-than-expected guidance. Citigroup lowered their target price to $14 from $20.
  
• JMP Securities downgraded Brocade (NASDAQ: BRCD) to Market Perform from Outperform following the company's announcement to buy Foundry Networks, Inc. (NASDAQ: FDRY) for $19.25 per share.

OTHER DOWNGRADES:

• ArthroCare (NASDAQ: ARTC) was lowered to Market Perform from Outperform at William Blair.
  
• JP Morgan downgraded Assured Guaranty (NYSE: AGO) and Lenovo Group (LNVGY) to Neutral from Overweight.
  
• iStar Financial (NYSE: SFI) was downgraded to Sell from Buy at UBS.
  
• Goldman removed Gilead Sciences (NASDAQ: GILD) from the Conviction Buy List.

MOST NOTEWORTHY: Assured Guaranty, Limelight Networks and Monotype Imaging were today's noteworthy initiations:

• UBS expects Assured Guaranty (NYSE: AGO) to increase shares in the public finance guaranty market and take advantage of reinsurance opportunities. Shares were initiated with a Buy rating and $31 target.
  
• Merriman assumed Limelight Networks (NASDAQ: LLNW) with a Neutral rating. The firm believes investors should remain cautious until a ruling in the company's patent infringement trial is handed down.
  
• Monotype Imaging (NASDAQ: TYPE) was initiated at Banc of America with a Buy rating and $16 target. The firm highlighted the company's strong revenue visibility and attractive valuation. Shares were also initiated at JP Morgan with an Overweight rating, citing TYPE's discounted valuation and solid IP licensing franchise.

OTHER INITIATIONS:

• B. Riley assumed National Penn Bancshares (NASDAQ: NPBC) with a Neutral rating and $16 target.
  
• Vestas Wind Systems (OTC: VWSYF) was initiated at Jefferies with a Hold rating.
  
• UBS started MBIA Inc (NYSE: MBI) with a Neutral rating and $6 target.
  
• Morgan Joseph initiated DXP Enterprises (NASDAQ: DXPE) with a Buy rating and $53 target.

MOST NOTEWORTHY: The airline sector, Siemens and Internap were today's noteworthy downgrades:

• Lehman downgraded the airline sector to Neutral from Positive, citing higher fuel costs and the weakening economy. AirTran (NYSE: AAI) and U.S. Airways (NYSE: LCC) were downgraded to Equal Weight from Overweight. UBS said it can no longer recommend airline stocks due to weakening economy, high fuel prices, and less likely industry consolidation. The firm downgraded Continental Airlines (NYSE: CAL), Delta Air Lines (NYSE: DAL), Northwest Airlines (NYSE: NWA) and U.S. Airways to Neutral from Buy.
  
• Goldman removed shares of Siemens (NYSE: SI) from their Conviction Buy List as they believe the company may book additional charges of $1.2B this year.
  
• Jefferies cut Internap (NASDAQ: INAP) to Underperform from Buy as they believe the 10-K filing delay and revenue quality questions reduce visibility into the health of the business.

OTHER DOWNGRADES:

• Wachovia lowered Amgen (NASDAQ: AMGN) to Market Perform from Outperform.
  
• SI International (NASDAQ: SINT) was downgraded to Neutral from Outperform at Cowen.
  
• Citigroup cut Assured Guaranty (NYSE: AGO) to Hold from Buy.

Assured Guaranty (NYSE: AGO) closed at $25.65 Friday.

Wilbur Ross announced on Feb. 29 the agreement to purchase $250 million of AGO common stock as well as a commitment to purchase up to $750 million additional shares at AGO's option for one year after the closing of the initial investment at 97% of the volume weighted average price of the common shares for the 15 days prior to the notice of investment.

AGO is a Bermuda-based holding company that provides credit enhancement products.

AGO overall option implied volatility of 54 is below its 26-week average of 64 according to Track Data, suggesting decreasing risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Wilbur Ross may like to invest in distressed companies, but it looks like some of the teetering bond insurers may be too much even for him. According to Forbes.com, today he put an end to speculations about shoring up a troubled insurer by announcing he would be investing nearly $1 billion in the relatively stable Assured Guaranty(NYSE:AGO), a Bermuda-based reinsurer.

Some on Wall Street had hoped Ross could put his cash muscle behind on of the insurers that struggling, such as AMBAC Financial Group(NYSE:ABK). But Ross is playing it safer in these turbulent financial markets.

According to Marketwatch, Ross insists that the first $250 million is not "rescue capital". "The idea is to enhance their position for internal growth." he said. So more deals may be in the future.

The markets like the news as shares of AGO are up today a little over 10%.

MOST NOTEWORTHY: Celera Genomics, Plantronics and Nymex were today's noteworthy upgrades:

• JMP Securities upgraded Celera Group, Applera Corp. (NYSE: CRA) to Outperform from Market Perform, as they believe an announcement on the company's evaluation of its tracking stock could come as early as 1Q08, a split of Celera/Applied Biosystems could occur by FY08, and a new finding in a peer-review journal that predicts risk of coronary heart disease and statin benefit within the next six weeks.
  
• Baird raised Plantronics (NYSE: PLT) to Outperform from Neutral based on valuation, strength in the Center and Office segment, and negative sentiment on Mobile revenues unwarranted.
  
• Deutsche Bank upgraded shares of NYMEX (NYSE: NMX) to Buy from Hold and raised their target to $160 from $145 to reflect stabilized floor volumes, increased trading of commodities and acquisition potential consensus estimates that are too low. Deutsche named NMX their top exchange idea for 2008.

OTHER UPGRADES:

• Citigroup upgraded Blue Nile (NASDAQ: NILE) to Buy from Hold.
  
• Goldman upgraded Schlumberger (NYSE: SLB) to Buy from Neutral.
  
• Keefe Bruyette added Assured Guaranty (NYSE: AGO) to its Best Ideas List.

MOST NOTEWORTHY: YRC Worldwide (YRCW), BEA Systems (BEAS), Isle of Capri Casinos (ISLE), Assured Guaranty Ltd (AGO) and Avaya (AV) were today's more noteworthy downgrades:

• Wachovia downgraded YRC Worldwide (NASDAQ: YRCW) to Market Perform from Outperform citing the challenging LTL freight environment and continued integration issues.

• UBS downgraded shares of BEA Systems (NASDAQ: BEAS) to Neutral from Buy on valuation as they believe expectations for a takeover or investor activism is already priced into shares.

• Matrix believes Isle of Capri (NASDAQ: ISLE) is expensive on a performance-adjusted basis and recommends investors sell shares into the recent rally, downgrading shares to Sell from Hold.

• JP Morgan cut Assured Guaranty (NYSE: AGO) to Underweight from Neutral on valuation.

• JMP Securities downgraded Avaya (NYSE: AV) to Market Perform from Strong Buy, as the firm doesn't expect a superior offer to the Silver Lake/TPG bid...

OTHER DOWNGRADES:

• MicroChip Technology (NASDAQ: MCHP) was cut to Market Perform from Outperform at Piper Jaffray.

• Morgan Stanley downgraded Wynn Resorts (NASDAQ: WYNN) to Equal Weight from Overweight.

• Baird downgraded Authorize.net Holdings (NASDAQ: ANET) to Neutral from Outperform.

• Morgan Keegan downgraded Inter-Tel Inc (NASDAQ: INTL) to Market Perform from Outperform.

• Stifel cut Dover Downs Gaming & Entertainment (NYSE: DDE) to Sell from Hold.

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