MOST NOTEWORTHY: Bear Stearns (BSC), Citigroup (C), Lehman (LEH), Chicago Bridge & Iron (CBI) and Bed Bath & Beyond (BBBY) were today's noteworthy downgrades:
Merrill downgraded Bear Stearns (NYSE: BSC), Citigroup (NYSE: C) and Lehman Brothers (NYSE: LEH) to Neutral from Buy to reflect greater earnings risk stemming from the slowdown in securitization and mortgage. Merrill also finds it "inevitable" that revenue from underwriting and advising on takeovers will slow.
Stanford downgraded shares of Chicago Bridge & Iron (NYSE: CBI) to Sell from Hold as they believe the premium valuation is unjustified given the Lummus acquisition.
Merrill Lynch cut Bed Bath & Beyond (NASDAQ: BBBY) to Sell from Neutral based on slowing secular growth...
OTHER DOWNGRADES:
Goldman downgraded Zale (NYSE: ZLC) to Sell from Neutral.
MOST NOTEWORTHY: VMware (VMW), Bed, Bath & Beyond (BBBY), Williams-Sonoma (WSM), Landstar System (LSTR) and Acadia Pharmaceuticals (ACAD) were the noteworthy initiations:
Robert W. Baird initiated coverage on VMware (NYSE: VMW) with a Neutral rating citing valuation.
Citigroup started Bed Bath & Beyond (NASDAQ: BBBY) with a Hold rating, and cited the increasing competitive environment, slowing square footage growth and the weak housing market.
Citigroup started Williams-Sonoma (NYSE: WSM) with a Sell rating and said the company has an inventory glut that could lead to markdown risk, there is raw material price inflation, and the weak housing market remains a material risk.
Wachovia is cautious on Landstar System's (NASDAQ: LSTR) near-term growth rates and difficult end markets, starting shares with a Market Perform rating.
Deutsche is positive on the potential of Acadia Pharmaceutical's (NASDAQ: ACAD) ACP-103 in schizophrenia, starting shares with a Buy rating...
MOST NOTEWORTHY: Chittenden Corp (CHZ), Digital River (DRIV), Image Entertainment (DISK) and Foot Locker (FL) were today's noteworthy downgrades:
Chittenden Corp (NYSE: CHZ) was downgraded to Sell from Hold at AG Edwards based on the buyout news from People's United Financial (PBCT).
Digital River(NASDAQ: DRIV) was downgraded to Hold from Buy, and its target was cut to $44, at Jeffries based on the weak Microsoft (MSFT) ramp and weakness in the Symantec (SYMC) transition.
SMH Capital downgraded shares of Image Entertainment (NASDAQ: DISK) to Sell from Neutral and recommends investors take profits on the upside and sell shares.
Foot Locker (NYSE: FL) was downgraded to Hold from Buy at Matrix, as the firm believes fundamentals trends are turning negative; the firm sees limited upside from current levels.
OTHER DOWNGRADES:
Bed Bath & Beyond (NASDAQ: BBBY) was downgraded to Market Perform from Outperform at Raymond James.
Johnson & Johnson (NYSE: JNJ) was removed from Goldman Sachs' Americas Conviction Buy List.
Web.com (NASDAQ: WWWW) was downgraded to Hold from Buy at Roth Capital Partners.
Andrew Corp (NASDAQ: ANDW) was downgraded to Neutral from Buy at Oppenheimer.
JP Morgan downgraded shares of SkyWest (NASDAQ: SKYW) to Underweight from Overweight and shares of Republic Airways Holdings (NASDAQ: RJET) to Neutral from Overweight.
CIBC started Chemtura Corp (NYSE: CEM) with a Sector Underperformer rating and $11 target on valuation.
C.E. Unterberg started Altus Pharmaceuticals Inc (NASDAQ: ALTU) with a Buy rating and $12 target, believing the company's efforts to develop the first juvenile formulation of a pancreatic enzyme will be a key growth driver.
MOST NOTEWORTHY: Bear Stearns (BSC), Citigroup (C), Lehman (LEH), Chicago Bridge & Iron (CBI) and Bed Bath & Beyond (BBBY) were today's noteworthy downgrades: 
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