Analyst upgrades:

• Goldman upgraded Intercontinental Exchange (NYSE: ICE) to Conviction Buy from Neutral and raised their target to $90 from $60. Goldman cites ICE's positioning and potential for upward EPS revisions for the upgrade.
  
• Jefferies upgraded FMC Technologies (NYSE: FTI) to Buy from Hold as they believe solid deepwater activity levels will lead to solid EPS results in 2009 and 2010. The firm raised their price target to $45 from $27.
  
• Friedman Billings upgraded Devon Energy (NYSE: DVN) to Outperform from Market Perform on valuation and expects significant improvement in basis differentials for the company's Barnett production starting the second half of Q2. The firm raised their price target to $60 from $50.
• Elan Corp (NYSE: ELN) was raised to Neutral from Sell at Piper Jaffray.
  
• Banco Santander (NYSE: STD) was upgraded at Keefe Bruyette to Outperform from Market Perform.

Analyst upgrades:

• UBS upgraded Safeway (NYSE:SWY) to Buy from Neutral based on valuation.
  
• AthroCare (NASDAQ:ARTC) was raised to Neutral from Negative at Susquehanna on valuation.
• BT Group (NYSE:BT) was raised to Neutral from Underperform at Credit Suisse.
  
• Leap Wireless (NASDAQ:LEAP) was upgraded at Goldman to Buy from Neutral.
  
• China Mobile (NYSE:CHL) was upgraded to Buy from Neutral at Merrill Lynch.

Analyst downgrades:

• Jefferies downgraded shares of Albany Molecular (NASDAQ:AMRI) to Underperform from Hold on concerns regarding the company's exposure to small biopharma as their checks suggest biopharmaceutical companies that rely on the capital markets to fund operations are cutting back significantly on R&D projects. The firm lowered their target to $8 from $10.
• Baird downgraded Sirona Dental (NASDAQ:SIRO) to Neutral from Outperform and lowered their target to $15 from $21 due to lack of catalysts and better options in dental.
  
• Stephens cut Hub Group (NASDAQ:HUBG) to Equal Weight from Overweight on the expectation that weaker volumes will lead to pricing pressure. The firm lowered their target to $24 from $36.
• Teco Energy (NYSE:TE) was downgraded to Hold from Buy at KeyBanc.
  
• RF Micro Devices (NASDAQ:RFMD) was lowered to Underperform from Buy at Merrill Lynch.
  
• Energy Conversion (NASDAQ:ENER) was cut to Underweight from Equal Weight at Barclays.

MOST NOTEWORTHY: Barclays, City National and BAE Systems were today's noteworthy upgrades:

• Morgan Stanley upgraded shares of Barclays (NYSE:BCS) to Overweight from Equal Weight after the company announced plans to raise capital and disclosed no further write-downs.
  
• Keefe Bruyette lifted City National (NYSE:CYN) to Outperform from Market Perform on valuation, as they believe the company should outperform peers in terms in credit quality.
  
• Societe Generale upgraded shares of BAE Systems (Other OTC:BAESY) to Buy from Hold to reflect the company's earnings visibility.

OTHER UPGRADES:

• Baird upgraded Host Hotels (NYSE:HST) to Outperform from Neutral.
  
• Goldman added Monsanto (NYSE:MON) to its Conviction Buy List.
• Corinthian Colleges (NASDAQ:COCO) was raised to Overweight from Equal Weight at Lehman.

MAJOR PAPERS:

• Harris Corporation (NYSE: HRS), concerned about its future growth, may see limited opportunity and may consider selling itself, the Wall Street Journal reported. If it does decide to sell, suitors could include Raytheon Company (NYSE: RTN), BAE Systems Plc (OTC: BAESY) and Northrop Grumman Corporation (NYSE: NOC).
• The Wall Street Journal reported that, in an attempt to toughen its regulation standards, SEC chairman Christopher Cox said earlier this week the agency would push Wall Street investment houses will have to reduce borrowing and rely less on short-term financing.
• As part of plans to reduce costs and restore profit growth, people close to the situation said that Citigroup Incorporated (NYSE: C) is likely to today identify up to $400B in non-core assets that could be sold. Additionally, the Financial Times reported that Citigroup CEO Vikram Pandit will confirm his pledge to cut the bank's cost base by about 20% at a meeting with analysts today. Sources familiar with the matter believe Pandit will dismiss calls for a break-up of the company.

OTHER PAPERS:

• According to sources, the New York Post reported that the ax may fall as early as next week on some investment bankers at The Bear Stearns Companies Inc (NYSE: BSC).

MOST NOTEWORTHY: Procter & Gamble, Human Genome and Arcelor Mittal were today's noteworthy downgrades:

• Deutsche Bank downgraded shares of Procter & Gamble (NYSE:PG) to Hold from Buy on valuation and their expectation for slowing short-term industry growth, especially in beauty.
  
• Citigroup downgraded Human Genome (NASDAQ:HGSI) to Hold from Buy as they believe giving up Syncria's royalties removes an important value driver for the stock.
  
• HSBC downgraded shares of Arcelor Mittal (NYSE:MT) to Neutral from Overweight on valuation and believes the company needs to raise prices more than costs have risen for iron ore, coking coal and steel scrap.

OTHER DOWNGRADES:

• BAE Systems (NASDAQ:BAESY) was cut to Equal Weight from Overweight at Morgan Stanley.
  
• Merrill downgraded Zoltek (NASDAQ:ZOLT) to Neutral from Buy.
  
• Credit Suisse downgraded Illinois Tool Works (NYSE:ITW) and International Paper (NYSE:IP) to Neutral from Outperform.

MAJOR PAPERS:

• To help stabilize the housing market, the Wall Street Journal reported that the Bush Administration is planning to help create fresh funding for mortgages. The plan, which still requires final approval, is said to ease an excess-capital requirement for government sponsored organizations Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, and the Federal Housing Administration.
• The Wall Street Journal also reported that a merger between Northwest Airlines Corporation (NYSE: NWA) and Delta Air Lines Inc (NYSE: DAL) may be derailed after Delta pilots notified executives they remain unable to reach an agreement with Northwest pilots on how to integrate pilot ranks should the two combine.
• The Financial Times reported that BAE Systems Plc (OTC: BAESY) won a $715M order to supply nearly 1,500 mine-resistant vehicles from the U.S. government.

OTHER PAPERS:

• The Chinese government has locked out Australian mining giants BHP Billiton Limited (NYSE: BHP) and Rio Tinto Plc (NYSE: RTP) from selling iron ore into its daily spot market, the Sydney Morning Herald reported. Mining sources said that the decision may have already cost Australia up to $300M in export profits.

MAJOR PAPERS:

• The Wall Street Journal reported that the Fed may act soon to confront banks' unwillingness to lend to each other.
• After several months of delays, The Boeing Company (NYSE: BA) said its 787 Dreamliner is on track to fly its first aircraft in the first quarter of next year and deliver the plane to its first customer by the end of 2008. Full-rate aircraft production is slated for 2008 and 2009, the Wall Street Journal reported.

OTHER PAPERS:

• The Seattle Times reported that Cellcyte Genetics Corp (OTC: CCYG) has risen to a value of over $440M, a figure which the CEO says is an "amazing" show of investor confidence in the company's stem cell technology. The B.C. Securities Commission has cautioned that this may be a pump-and-dump stock scheme, where promoters take a large position in an inexpensive stock, hype it, and unload it onto unsuspecting investors.
• According to the UK Times, BAE Systems (OTC: BAESY) is looking to outbid rivals in what could be an A$1B deal for Australia's second-largest defense company, Tenix. Other bidders may include L-3, Carlyle Group and Leighton Holdings Ltd (OTC: LGTHF).

MOST NOTEWORTHY: BAE Systems, VASCO Data Security, Salesforce.com, Tempur Pedic and Fidelity National were today's noteworthy upgrades:

• Goldman added BAE Systems (OTC: BAESY) to its Conviction Buy List, as they believe the company's defensive growth characteristics will lead to outperformance.
• Jefferies upgraded shares of VASCO Data Security International Inc (NASDAQ: VDSI) to Buy from Hold on valuation following the recent sell-off in the stock.
• Salesforce.com Inc (NYSE: CRM) was upgraded to Outperform from Market Perform at Piper to reflect the company's strong cash flow generation and the firm's belief that CRM is a core holding in the enterprise application market.
• Citigroup upgraded shares of Tempur Pedic International Inc (NYSE: TPX) to Buy from Hold, as they believe double-digit sales growth and margin expansion will drive 25% EPS growth over the next few years.
• SunTrust raised its rating on Fidelity National Information Services Inc (NYSE: FIS) to Buy from Neutral on valuation.

OTHER UPGRADES:

• JP Morgan raised its rating on Mattel Inc (NYSE: MAT) to Overweight from Neutral.
• Broadpoint upgraded Pacific Ethanol Inc (NASDAQ: PEIX) to Underperform from Sell.
• Merrill upgraded Wyeth (NYSE: WYE) to Buy from Neutral.
• CIBC upgraded Acuity Brands Inc (NYSE: AYI) to Sector Outperformer from Sector Performer.

MAJOR PAPERS:

• "The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock market crash of 1987, I suspect what we saw in the land boom collapse of 1837 and certainly [the bank panic] 1907," said Alan Greenspan, the former Federal Reserve chairman, reported the Wall Street Journal.
• In an attempt to reverse slow North American sales of Gatorade, PepsiCo Inc (NYSE: PEP) is launching a low calorie version, reported the Wall Street Journal.

OTHER PAPERS:

• British arms manufacturer BAE Systems (OTC: BAESY) will reportedly receive a GBP20B deal next week to supply 72 Eurofighter Typhoon jets to Saudi Arabia, reported the U.K. Times.
• British telecom company Vodafone Group (NYSE: VOD) is considering buying the Italian and Spanish operations of Swedish telecom company Tele2, reported the Guardian.
• From BusinessWeek's "Inside Wall Street" column:
  
• NYSE Euronext Inc (NYSE: NYX) runs cash equity exchanges in five countries and six derivative markets worldwide, and Birkelbach Investment Securities feels the stock is "very undervalued."
• The outlook for Access Pharmaceuticals Inc (NASDAQ: ACCP) and ProLindac has vastly improved, said Steven Rouhandeh, CEO of SCO Financial Group, which owns a 30% stake in the company.
• NeoStem Inc (NYSE: NBS) is a tiny company that specializes in collecting, processing, and storing stem cells from healthy adults for their personal medical use, and Equity Dynamics is positive on the company's technology.

MOST NOTEWORTHY: Seagate Technology (STX), SAP AG (SAP), Western Digital (WDC), BAE Systems (BAESY) and Manpower (MAN) are today's noteworthy upgrades:

• Hambrecht upgraded shares of Seagate Tech (NYSE: STX) on improving demand and second half of 2007 prospects. Bear Stearns upgraded shares to Outperform from Peer Perform based on stabilizing industry conditions.

• ING upgraded shares of SAP AG (NYSE: SAP) to Buy from Hold shares to reflect the migration within the company's large installed base and growing opportunities in the small business market.

• Hambrecht upgraded Western Digital (NYSE: WDC) to Buy from Hold on improving demand for 2H07 growth prospects.

• HSBC raised BAE Systems (OTC: BAESY) off the ground, upgrading shares to Neutral from Underweight.

• Banc of America upgraded Manpower (NYSE: MAN) to Buy from Neutral to reflect the change in French payroll tax subsidies, which they view as a positive change to the company's ongoing margin structure.

OTHER UPGRADES:

• First Albany upgraded ATMI Inc (NASDAQ: ATMI) to Buy from Hold.

• The Medicines Co (NASDAQ: MDCO) was raised to Sector Perform from Underperform at RBC Capital.

• Sonic Solutions (NASDAQ: SNIC) was upgraded to Buy from Hold at Kaufman.

• ThinkEquity upgraded Interwoven (NASDAQ: IWOV) to Accumulate from Source of Funds.

• BB&T upgraded Omnicell (NASDAQ: OMCL) to buy from Hold.

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

On Thursday, the United States approved the $4.1 billion takeover of Armor Holdings Inc (NYSE: AH) by BAE Systems PLC (OTC: BAESY). Sources speculated the deal could come under intense scrutiny by the U.S. Department of Justice and Congress after BAE was accused of bribery, paying money to a Saudi prince as part of a 1980s arms deal.

After a standard 30-day review, the Committee on Foreign Investment said they found "no issues of national security to warrant an investigation." The proposed takeover is currently under antitrust review by the DoJ, who is still considering an investigation into whether BAE violated anti-bribery laws.

Some sources thought a deal may not have been a certainty, as the U.S. government has been increasingly tough on approving foreign transactions following last year's controversy surrounding Dubai Ports World's failed takeover of five U.S. port terminals.

MAJOR PAPERS:

• The Wall Street Journal reported that Sprint Nextel Corporation (NYSE: S) is reviewing its options to finance the building of WiMax, a wireless broadband network; a hook-up with Clearwire Corporation (NASDAQ: CLWR) is a possibility.
• The word is out that Liberty Media Corporation (NASDAQ: LCAPA) and EchoStar Communications Corporation (NASDAQ: DISH) will make a joint bid for the satellite communications provider Intelsat, Ltd, possibly somewhere in the $4.5B-$5.5B range, the Wall Street Journal reported.
  
• The Financial Times reported that Congress removed blocks on arms transfer requests by U.K. weapons manufacturer BAE Systems plc (OTC: BAESY), acting after BAE assured them that the transfer requests were unrelated to a defunct British investigation into bribery allegations involving Saudi Arabia and BAE.
• According to Barron's Online's "Weekday Trader," Sony Corporation (NYSE: SNE) is climbing its way back to electronic prominence, but more work remains, and it may be time to take profits.

WEBSITES:

• LiveMint.com reported that Citigroup Inc's (NYSE: C) emerging markets private-equity investment arm, Citigroup Venture Capital International, will reportedly invest $1.5B in India over the next three years, the largest investment by a single private-equity investor in the Indian markets.

The story has all the stuff of a steamy summer novel. A large British defense contractor pays millions to a Saudi prince, and now Washington regulators are trying to figure out if U.S. banks played a role. A BBC investigative report reveals that a Saudi prince who worked out an $80 billion arms arrangement between Britain and Saudi Arabia took secret payments for at least a decade. According to the probe, BAE Systems ADR (OTC: BAESY), one of Europe's largest arms dealers, distributed hundreds of millions of dollars to the ex-Saudi ambassador to the U.S., Prince Bandar bin Sultan. Evidently, money changed hands with the full knowledge of the U.K.'s Ministry of Defence. Neither the Prince, nor the Defense Ministry would comment on the arrangement.

Former BAE chief executive Sir Raymond Lygo told the BBC there was "nothing untoward" about the arms deal, but he had nothing to say about the payments to the Prince. Britain's Serious Fraud Office first revealed the payments. It was trying to figure out whether or not they were illegal under British law when the office's investigations were halted out of fear of angering Saudi authorities, according the the BBC. They stopped in 2006. Prince Bandar is well connected. His father is the Saudi defense minister. The Prince now runs the Saudi national security council. He served as U.S. ambassador for two decades and the payments allegedly were funneled through Washington bank accounts.

The American connection: Marketplace reports that there are two key U.S. links to this story. The U.S. Department of Justice is taking an interest in the imbroglio because if it's true that money went through American banks, the case would fall under scrutiny of U.S. authorities. What's more, there's a political connection. The Pentagon is a huge customer of BAE. If anyone can think of a better plot line than the one threading this story, send us your ideas.

MOST NOTEWORTHY: Today's most noteworthy downgrades included Armor Holdings, Inc (AH), Alcan Inc (AL), Advance Auto Parts, Inc (AAP) and Reuters Group PLC (RTRSY):

• Armor Holdings Inc (NYSE: AH) was downgraded to Neutral from Overweight at JP Morgan based on the news that the company will be sold to BAE Systems PLC (BAESY) for $88 a share in cash. The firm expects the deal to close with no higher offers. Bear Stearns cut Armor Holdings to Peer Perform from Outperform and Friedman Billings cut shares of the vehicle armorer to Market Perform from Outperform.

• Alcan Inc (NYSE: AL) was cut to Neutral from Buy at Bank of America and DA Davidson following the Alcoa (AA) bid.

• Baird cut Advance Auto Parts (NYSE: AAP) to Neutral from Outperform following CEO Michael Coppola's resignation. Kevin Dann downgraded Advance to Hold from Buy to reflect an increased level of uncertainty following Mr. Coppola's departure.

• Lehman Brothers downgraded Reuters Group (NASDAQ: RTRSY) to Equal Weight from Overweight pending further information on the Thompson Corp (TOC) bid; Credit Suisse cut shares to Neutral from Outperform and Deutsche Bank cut shares to Hold from Buy.

OTHER DOWNGRADES:

• Matrix downgraded UST Inc (NYSE: UST) to Sell from Hold.

• Needham cut Entegris, Inc (NASDAQ: ENTG) to Hold from Buy.

• UBS downgraded shares of Golden Star Resources (AMEX: GSS) to Reduce from Neutral.

• Wachovia cut Rowan Cos (NYSE: RDC) to Market Perform from Outperform.

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

MAJOR PAPERS:

• According to the Wall Street Journal, citing people familiar with the situation, the NY Attorney General and the SEC are both investigating "suspicious trading" in shares and options of Dow Jones and Company Inc (NYSE: DJ) prior to the $5B offer by News Corporation (NYSE: NWS).
• The Wall Street Journal reported that the UK's financial-services regulator has begun a preliminary review of trading by hedge funds in ABN Amro Holdings (NYSE: ABN), according to people familiar with the situation.
• BAE Systems (OTC: BAESY), the British defense contractor, is in the final stages of its $3.5B takeover of Armor Holdings Inc (NYSE: AH), the U.S. manufacturer of military and heavy vehicles, reported the Wall Street Journal.
• The Wall Street Journal reported that a consortium led by the Royal Bank of Scotland Group (OTC: RBSPY) has made a formal $24.5B offer for ABN Amro's LaSalle Bank, according to people familiar with the situation.
• The Financial Times reported that Dutch bank ABN Amro rejected a $24.5B offer for its U.S. bank, LaSalle, from a consortium led by Royal Bank of Scotland today. However, ABN said it would allow its shareholders to vote on the offer.

OTHER PAPERS:

• Safeway Stores Inc's (NYSE: SWY) CEO, Steven Burd, said that Dominick's is not for sale in an interview with the Chicago Tribune.

WEBSITES:

• According to TheAlarmClock.com, Global Equities Research analyst Trip Chowdry believes Google Inc (NASDAQ: GOOG) is "stepping up its efforts" to acquire job search engine SimplyHired.