Rival home improvement chains Home Depot Inc. (NYSE: HD) and Lowe's Companies Inc. (NYSE: LOW) are scheduled to report quarterly results this week. Not surprisingly, given the ongoing housing slump, analysts surveyed by Thomson Financial on average expect both companies to post earnings lower than in the same period a year ago. For Home Depot, that's 61 cents per share, down 20.8%, and for Lowe's, 56 cents per share, down 16.4%. Meanwhile, cabinet maker American Woodmark Corp. (NASDAQ: AMWD), for whom Home Depot and Lowe's are major distributors, is also expected to report lower earnings: 11 cents per share, down 67.6%.
The presidential campaigns have prompted much discussion of energy policy and alternative energy sources. Some solar-energy-related concerns are scheduled to report this week, and expectations seem to be high. Trina Solar Ltd. (NYSE: TSL) is expected to report 81 cents per share earnings, up 67.9%; ReneSola Ltd. (NYSE: SOL) is expected to post earnings of 32 cents per share, up 62.5%; and Suntech Power Holdings Co. (NYSE: STP) is expected to have earnings of 32 cents per share, up 21.9%. Even China Sunergy Co. Ltd. (NASDAQ: CSUN) is expected to have swung to a profit of 3 cents per share, from a per-share loss of 14 cents a year ago.
I know, I know, with the economy sputtering, why would you ever want to be invested in an apparel company that produces expensive jeans? Let alone have it recommended by a typically short-selling trader like me! But before I tell you the name of this stock that despite the obvious economic problems -- strong oil, weak housing and the dollar, mounting foreclosure, etc -- is sitting right near all-time highs, looking to break out, let's do a quick rundown of its competitors in the apparel retail space.
MOST NOTEWORTHY: Ford Motor Co, Advanced Micro Devices, Brocade, Netflix and Equinix were today's noteworthy upgrades:
Bear Stearns believes Ford Motor Company (NYSE: F) could also benefit from similar deal to General Motors Corporation's (NYSE: GM) potential VEBA healthcare restructuring with the UAW. The firm upgraded Ford shares to Outperform from Peer Perform.
Advanced Micro Devices (NYSE: AMD) was upgraded to Neutral from Underweight at JP Morgan. The firm expects AMD's Barcelona server chip will help close the gap vs. Intel Corporation (NASDAQ: INTC).
Citigroup upgraded shares of Brocade Communications Systems (NASDAQ: BRCD) to Buy from Hold and added the stock to their Global Tech Conviction List on expectations for market share gains and margin upside in 2008.
Thomas Weisel upgraded shares of Netflix Inc (NASDAQ: NFLX) to Overweight from Market Weight, citing reduced pressure from competitor Blockbuster Inc (NYSE: BBI), which could lead to upside in subscribers.
Needham upgraded shares of Equinix (NASDAQ: EQIX) to Buy from Hold to reflect improving fundamentals and potential upside from the IXEurope acquisition.
Stock futures are indicating a higher open for U.S. equity markets today following the cash infusion Countrywide Financial will get from Bank of America and the significant rally in Asia.
Yesterday U.S. stocks rose yesterday as continued chatter and hopes the Federal Reserve would cut the Fed fun rate helped push the Dow up 145 points, or 1.1%. The Nasdaq and the S&P 500 made similar gains.
The rally seems to be continuing today as investors seem to be more confident banks will help prevent damage to the economy from the troubled credit market.
Bank of America Corp. (NYSE: BAC) announced after the close yesterday it would invest $2 billion into Countrywide Financial Corp. (NYSE: CFC). Not only will this infusion help contain the problems at the troubled mortgage company, but may also help prevent further losses. Some even see this as a precursor to a full merger between the two. Countrywide shares jumped 19% in Frankfurt trading while Bank of America shares rose 0.9%. In premarket trading BAC shares are up 1.16% as of 7:00 a.m. and CFC shares up 18.47% as of 7:16 a.m. Wachovia also upgraded CFC to Market Perform from Underperform following BAC's investment.
Not only that, but globally stocks rose with Asia staging quite a rally. Tokyo's Nikkei 225 average ended 415.68 points higher, rising 2.6%. Hong Kong's Hang Seng Index ended 2.8% higher. European shares gained for the fifth session in a row, with miners in the lead.
Economic data today includes weekly jobless claims at 8:30 a.m.
As for the Fed, it seems that at least the reduced discount rate helped banks as several said the borrowed from the Fed discount facility. While usually not the best sign that banks need to borrow so much money, it may indicate in this case that an easing on credit may follow.
Earnings reports from retailers are expected today including Gap Inc. (NYSE: GPS) and Bebe Stores Inc. (NASDAQ: BEBE).
MOST NOTEWORTHY: American Home Mortgage (AHM), Biogen Idec (BIIB), Bebe Stores (BEBE), Ingersoll-Rand (IR) and SK Telecom (SKM) were today's more noteworthy downgrades:
RBC Capital cut American Home Mortgage (NYSE: AHM) to Sector Perform from Outperform citing the deterioration in the global debt markets for the downgrade.
Morgan Stanley downgraded shares of Biogen Idec (NASDAQ: BIIB) to Underweight from Equal Weight citing risk to Rituxan growth.
Merriman downgraded Bebe Stores (NASDAQ: BEBE) to Neutral from Buy as they believe new fall merchandise is not performing well enough to improve sales trends.
Robert W. Baird downgraded shares of Ingersoll-Rand (NYSE: IR) to Neutral from Outperform citing higher risk premium due to the IRS challenge and tighter credit markets that could impact the Bobcat divestiture.
OTHER DOWNGRADES:
Children's Place (NASDAQ: PLCE) was cut to Neutral from Positive at Susquehanna.
Thomas Weisel downgraded LoopNet (NASDAQ: LOOP) to Market Weight from Overweight.
ThinkEquity cut Kyphon (NASDAQ: KYPH) to Accumulate from Buy.
Needham downgraded QLogic (NASDAQ: QLGC) to Hold from Buy.
JMP Securities downgraded ValueClick (NASDAQ: VCLK) to Market Perform from Outperform.
MOST NOTEWORTHY: Openwave Systems Inc (NASDAQ: OPWV), Trump Entertainment Resorts Inc (NASDAQ: TRMP) and Accredited Home Lenders Holding Co (NASDAQ: LEND) were today's noteworthy downgrades:
Openwave Systems Inc (NASDAQ: OPWV) was downgraded to Underperform from Buy at Needham, as the firm no longer believes the company's assets and balance sheet are worth $11/share and expects the franchise to be again disrupted due to layoffs and asset sales. Openwave was also downgraded to Neutral from Overweight at JP Morgan, to Hold from Buy at Wedbush after no superior bid emerged to Harbinger's, and to Sector Underperformer from Outperformer at CIBC World Markets, which cited reduced prospects of a buyout.
Trump Entertainment Resorts Inc (NASDAQ: TRMP) was downgraded to Underperform from Peer Perform at Bear Stearns citing valuation as upside from a takeout at current levels is remote.
Accredited Home Lenders Holding Co (NASDAQ: LEND) was downgraded to Market Perform from Outperform at Keefe Bruyette & Woods following its acquisition by Lone Star for $400M.
OTHER DOWNGRADES:
Bebe Stores Inc (NASDAQ: BEBE) was downgraded to Market Perform from Outperform at Friedman Billings citing new merchandise that lacks a significant casual component to drive business, tough comps, aggressively planned inventory levels for 2H, and the potential for sustained negative comps during the next few quarters.
Friedman Billings also downgraded Aladdin Knowledge Systems Limited (NASDAQ: ALDN) to Market Perform from Outperform based on valuation and challenges in the U.S. market.
General Mills Inc (NYSE: GIS) was downgraded to Peer Perform from outperform at Bear Stearns on valuation and concerns with the turnaround plan for Big G cereal division.
MOST NOTEWORTHY: The electronics manufacturing services sector was today's noteworthy initiation:
Credit Suisse initiated coverage of the EMS sector with an Underweight. The firm believes the industry is burdened with overcapacity in high-cost manufacturing regions, with hyper competition, allowing for no pricing power.
MOST NOTEWORTHY: IBM Corp (IBM), Amazon.com, Inc (AMZN), Hewlett-Packard Co (HPQ), Universal Technical Institute (UTI) and 3Com Corp (COMS) were some of today's noteworthy upgrades:
Goldman upgraded IBM Corp (NYSE: IBM) to Buy from Neutral to reflect the company's valuation creation moves, as the firm believes IBM's accelerated buyback program and pension expense reduction will be accretive to earnings.
Despite ThinkEquity's belief that the company was faltering, Amazon.com (NASDAQ: AMZN) customers have grown in size and accelerated their purchases. The upgrade to Accumulate from Source of Funds was based on Amazon.com's increase of market share in core categories.
AG Edwards upgraded Hewlett Packard (NYSE: HPQ) to Buy from Hold based on higher estimates, continued share gains and the evidence that HPQ has continued its cost cutting abilities.
BMO Capital upgraded shares of Universal Technical Institute (NYSE: UTI) to Market Perform from Underperform following the company's Q1 results.
3Com (NASDAQ: COMS) was upgraded to Hold from Sell at Matrix USA based on the company's improving balance sheet ..
MOST NOTEWORTHY: Bebe Stores Inc (BEBE) topped today's most notable initiations.
Wedbush started Bebe Stores Inc (NASDAQ: BEBE) with a Hold rating and $21 target; they believe shares are range-bound given near-term fashion risks and limited visibility into square-footage growth.
OTHER INITIATIONS:
Gymboree Corp (NASDAQ: GYMB) was initiated with a Buy rating and $48 target at Wedbush, as the firm expects margin expansion opportunities from recent sourcing initiatives.
Roth Capital added A.D.A.M. Inc (NASDAQ: ADAM) with a Buy rating and $8 target.
Friedman Billings started MBIA Inc (NYSE: MBI) with a Market Perform rating.
Lazard initiated Teekay Shipping Corp (NYSE: TK) with a Hold rating, citing valuation.
MOST NOTEWORTHY: Kimberly Clark (KMB) and Amazon.com (AMZN) topped today's most notable upgrades:
Prudential upgraded Kimberly Clark (NYSE: KMB) to Overweight from Underweight with an $80 target, reflecting lower commodity prices.
Stifel upgraded Amazon.com (NASDAQ: AMZN) to Buy from Hold with a $44 target, noting that Amazon is entering an operating leverage cycle and usually performs well in such environments.
OTHER UPGRADES:
Cowen considered bebe Stores's (NASDAQ: BEBE) risk/reward to be favorable at these levels, upgrading shares to Overweight from Neutral.
Prudential upgraded shares of Citigroup Inc (NYSE: C) to Overweight from Neutral.
Cardinal Health (NYSE: CAH) was upgraded to Overweight from Equal-Weight at Morgan Stanley.
Earlier in the week we blogged about Wal-Mart's Same-Store Sales miss, saying this was not enough information to signal the awful holiday shopping season the market predicted from the indicator. With more information now available, we thought we would review:
Wal-Mart Stores Inc. (NYSE:WMT) confirmed its preliminary SSS estimate of -0.1%, which at least did not drop further. Competitors Target Corp. (NYSE:TGT) and Costco Wholsesale Corp. (NASDAQ:COST) also announced their SSS numbers, with Target outperforming slightly [+5.9% vs. +5.7%] and Costco underperforming slightly [+5% vs. +5.7%]
High-end retail looked good, with both Federated Department Stores Inc. (NYSE:FD) [+8.4% vs. +4.8%] and Saks Inc. (NYSE:SKS) [+7.2% vs. +6.8%] outperforming
Clothing retailers were mixed, with Guess Inc. (NYSE:GES) [+12.1% vs. +5.6%], Pacific Sunwear of California Inc. (NASDAQ:PSUN) [-3.8% vs. -4.6%] and Hot Topic Inc. (NASDAQ:HOTT) [-4.3% vs. -6.8%] beating consensus estimates, while Abercrombie & Fitch Co. (NYSE:ANF) [-3% vs. +3%], Bebe Stores Inc. (NASDAQ:BEBE) [+5.8% vs. +7.9%] and perennial underperformer Gap Inc. (NYSE:GPS) [-8% vs. -5.4%] fell short of their estimates
Speaking of perennial underperformers, Pier 1 Imports Inc. (NYSE:PIR) [-15.3% vs. -13.6%] and Sharper Image Corp. (NASDAQ:SHRP) [-27% vs. -18%] continued embarrassing their investors.
This adds up to a mixed bag for retailers, with the sector as a whole seeing a good deal of weakness today. This Fly maintains that it is still too early to predict doom and gloom for the whole season, however. The true telling sign for the holiday shopping season will be in consumer electronics, as CIBC World Markets channel checks predict that consumer electronics "won the day" on Black Friday.
Rival home improvement chains Home Depot Inc. (NYSE: HD) and Lowe's Companies Inc. (NYSE: LOW) are scheduled to report quarterly results this week. Not surprisingly, given the ongoing housing slump, analysts surveyed by Thomson Financial on average expect both companies to post earnings lower than in the same period a year ago. For Home Depot, that's 61 cents per share, down 20.8%, and for Lowe's, 56 cents per share, down 16.4%. Meanwhile, cabinet maker American Woodmark Corp. (NASDAQ: AMWD), for whom Home Depot and Lowe's are major distributors, is also expected to report lower earnings: 11 cents per share, down 67.6%.
I know, I know, with the economy sputtering, why would you ever want to be invested in an apparel company that produces expensive jeans? Let alone have it recommended by a typically 
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Stock futures are indicating a higher open for U.S. equity markets today following the cash infusion Countrywide Financial will get from Bank of America and the significant rally in Asia.
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MOST NOTEWORTHY: The electronics manufacturing services sector was today's noteworthy initiation: 
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