MOST NOTEWORTHY: European banks, the Paper and Forest Products sector, Kindred Healthcare and Convergys were today's noteworthy upgrades:
Keefe Bruyette upgraded the European Banks sector to Neutral from Underweight on valuation as they see limited downside from current levels. Included in the firm's top picks are HSBC Holdings Plc (NYSE: HBC) and Banco Santander SA (NYSE: STD).
Credit Suisse upgraded the Paper and Forest Products sector to Overweight from Underweight citing valuations and expectations that fundamentals will bottom this fall. The firm raised shares of Temple-Inland Inc (NYSE: TIN) and Smurfit-Stone Container Corporation (NASDAQ: SSCC) to Outperform from Neutral.
Friedman Billings upgraded shares of Kindred Healthcare Inc (NYSE: KND) to Outperform from Market Perform on valuation following the recent pullback and believes the company is well-positioned to beat modest expectations over the remainder of the year. The firm raised their target to $36 from $29.
Oppenheimer raised Convergys Corporation (NYSE: CVG) to Outperform from Perform on valuation, as they believe investors should look at the company's business lines separately. Their sum of parts valuation yields an $18 target.
OTHER UPGRADES:
Suncor Energy Inc (NYSE: SU) was upgraded to Overweight from Neutral at JP Morgan and to Outperform from Market Perform at Friedman Billings.
UBS upgraded BT Group Plc (NYSE: BT) to Neutral from Sell.
Lehman Brothers reiterated its "overweight" rating on Apple (NASDAQ:AAPL) ahead of the 3G iPhone going on sale, according to the AP.
UBS downgraded Merck (NYSE:MRK) from "buy" to "neutral", according toBriefing.com. The news service also reports that Piper Jaffray upgraded Broadcom (NASDAQ:BRCM) to "buy" from "neutral."
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: iRobot, Felcor Lodging and Office Max were today's noteworthy initiations:
Stanford initiated iRobot (NASDAQ: IRBT) with a Buy rating and $18 target and believes better-than-expected military robot sales will allow the company to beat 2008 consensus estimates.
Felcor Lodging (NYSE: FCH) was initiated at Keefe Bruyette with a Market Perform rating and $12.50 target. The firm believes material upside is unlikely given the company's above average suburban and airport exposure.
Soleil assumed Office Max (NYSE: OMX) with a Hold rating and $17 target, as they believe macroeconomic challenges and heightened competition will limit near-term upside in the stock.
Don't know where the market is headed? Some people think a full blown crash is possible; some believe this is a good time to buy while others just don't know what to believe. Well, I just don't care and neither should you.
Because if you're like me, you've learned to take everything one high percentage profit trade at a time, whether you're betting on higher or lower prices. That's right, I'm talking about easy individual market inefficiencies like THIS.
As for the markets a whole, it's the same pathetic guessing game it'll always be, filled with plenty of "gurus" with polished-sounding theories where only a few truly brilliant hedge fund managers guess correctly with the rest of us just trying not to pull a Bill Miller (look foolish).
Editor's Note: This post comes courtesy of Sean Udall, a wise player in the tech field. For more, visit www.minyanville.com.
Interesting article on Apple's (NASDAQ: AAPL) iPhone "potential" teardown. Implications are that the 3G iPhone will carry higher margins than previous model. We will see shortly and I still expect Broadcom (NASDAQ: BRCM) to benefit from the actual teardown.
Speaking of Broadcom, the company got the all clear on a patent infringement deal with SiRF Technology Holdings (NASDAQ: SIRF) and I like the emerging technical setup on BRCM.
Elsewhere, Adobe (NASDAQ: ADBE) reports today and has been a solid tech name this year, really many years for that matter. I don't expect any big surprises.
Electronic Arts (NASDAQ: ERTS) is at the William Blair growth conference. Gaming sales were reported strong again last week. This is probably a cheap solid grower but I prefer the growing online gaming model, I've discussed on the Buzz in the past.
SunPower (NASDAQ: SPWR) was upgraded this morning and presenting at an Alternative Energy conference on Wednesday. I was going to trade this again but the analyst action is spiking the stock today.
Evergreen Solar's (NASDAQ: ESLR) shareholder and analyst meetings is scheduled this week and I'm thinking this could fuel bullish action.
Regarding Comverge (NASDAQ: COMV) and EnerNOC(NASDAQ: ENOC), I overheard some bullish comments on these stocks on CNBC this morning. I've discussed COMV on the buzz previously and ENOC is their sister company. Both companies offer technology solutions for managing the power grid more efficiently and I think both stocks are cheap emerging growth stocks.
Broadcom (NASDAQ: BRCM) shares are falling after Texas Instruments (NYSE: TXN) warned that weak demand for cell-phone chips could hurt TI's second-quarter earnings. TXN is off by about 2%, but since BRCM specializes in communications chips, it is taking a bigger hit from the bad news. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BRCM.
After hitting a one-year high of $43.07 in October, the stock hit a one-year low of $16.38 in March. This morning, BRCM opened at $27.00. So far today the stock has hit a low of $26.13 and a high of $27.00. As of 1:10, BRCM is trading at $26.69, down $1.01 (-3.7%). The chart for BRCM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider a July bear-call credit spread above the $32.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in six weeks as long as BRCM is below $32.50 at July expiration. Broadcom would have to rise by more than 21% before we would start to lose money. Learn more about this type of trade here.
Apple Inc. (NASDAQ: AAPL) Chief Executive Officer Steve Jobs will deliver his keynote speech Monday June 9 and may unveil then an iPhone that works with third-generation, or 3G, wireless networks, which are much faster than current AT&T (NYSE: T)'s network as Apple tries to lure business users from Research in Motion Ltd. (NASDAQ: RIMM) BlackBerry users and reach more international customers. If the iPhone was at first positioned as a consumer phone, the business segment is too lucrative to avoid, not to mention that many overseas customers are used to 3G networks.
Verizon Wireless has agreed Thursday to buy Alltel Corp. for $5.9 billion, which would make it by far the largest cellular carrier in the U.S. Verizon Wireless is a joint venture of Vodafone (NYSE: VOD) and Verizon Communications (NYSE: VZ). The deal comes just seven months after Alltel was taken private by TPG Capital and a unit of Goldman Sachs Group (NYSE: GS). Together, they would have some 80 million subscribers, surpassing AT&T (NYSE: T)'s 71 million.
MOST NOTEWORTHY: IBM, Entropic Comm and FARO Tech were today's noteworthy initiations:
BMO Capital is positive on IBM (NYSE: IBM) given the company's reduced pension and stock buyback, opportunity to increase the mix of software, new mainframe cycle, and the company's diverse revenue stream. Shares were initiated with an Outperform rating and $138 target.
Merriman views Entropic Comm (NASDAQ: ENTR) as a core holding for investors seeking exposure to the rapidly growing home networking market and finds the current valuation attractive; the firm started shares with a Buy rating.
Friedman Billings assumed FARO Tech (NASDAQ: FARO) with an Outperform rating and $42 target. The firm expects FARO's secular growth to drive sales as the company's products meet the needs of the largest emerging market for software-based manufacturing measurement systems.
OTHER INITIATIONS:
Oppenheimer initiated MedAssets (NASDAQ: MDAS) with a Perform rating and $20 target.
Broadcom (NASDAQ: BRCM) was initiated at Baird with a Neutral rating and $29 target.
LoopNet (NASDAQ: LOOP) was assumed with an Equal Weight rating and $15 target at Stephens.
Way back in early March I highlighted 10 horrifically downtrending stocks and said not to even think about buying them until they broke their nasty trendlines to the upside.
Over the past few weeks, many have displayed solid sideways price action, but it wasn't until yesterday that the high volume breakouts occurred. I'm talking about those 50+ million shares traded, 10%+ price surges beautifully accomplished by such popular names like Sprint Nextel Corp (NYSE: S), Broadcom Corp (NASDAQ: BRCM) and Level 3 Communications Inc (NASDAQ: LVLT).
Unsurprisingly, several other stocks also showed similarly strong price action:
I just checked out Qualcomm's (NASDAQ: QCOM) earnings report that was released after the bell on Wednesday -- there's nothing in there that screams "buy me!"
For the company's fiscal Q2, revenues increased 17% to about $2.6 billion. Not too bad on the top line, I suppose. The bottom line, however, didn't see fit to reach for the double-digit growth crown -- diluted earnings per share, with adjustments, rose 8% to $0.54. Furthermore, free cash flow declined by 29% on a year-over-year basis. Now, let's focus our gaze at the pro forma forecast -- Qualcomm is looking for a potential decrease in Q3 earnings per share, perhaps on the order of between 5% and 9%. Okay, that's just the next quarter -- surely the fiscal year will be better, right? Not really. At best, the full-year earnings per share number will increase 4%, and at worst, you can look for a tiny little increase of 1% (that was an improvement over previous guidance, I'll give management that).
I'll pass on Qualcomm. Not only do these growth rates fail to intrigue me, but the company has been involved in litigation with Broadcom (NASDAQ: BRCM) and Nokia (NYSE: NOK), as Douglas McIntyre discussed last month. I like to avoid companies with litigation issues that can possibly exert a negative influence on a stock's potential to rise. Perhaps when Qualcomm has its legal house in order, I'll take another look.
Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.
Shares closed mostly higher today, although this was more of a mixed day between the haves and the have-nots. Boeing Co. (NYSE: BA) managed to keep earnings inline with estimates and were not bad considering the weak airline sector, so its 4.4% gain to $82.09 was a huge relief for the DJIA today. Below are the unofficial closing levels for major US index levels:
Ambac Financial Group, Inc. (NYSE: ABK) posted losses that were wider than expected. It showed losses of $1.7 billion and $11.69 per share and a $3.1 billion in subprime charges. The company sells insurance policies that repay bondholders if issuers default. The 52-week range is $4.50 - $96.10. Shares hit a new low today, and traded down over 40% at $3.45 in the final minutes of trading.
MBIA Inc. (NYSE: MBI) dropped dramatically after Ambac's worse-than-expected earnings report. The rivals are expected to be hit hard by the wave of defaults it insures due to the subprime credit crisis. The two have been struggling to raise capital to cover losses and have suffered downgrades to their credit ratings. MBI shares were down 32% at $9.00 in the final minutes today.
So, this is my answer to you guys. I'm also going to throw in Broadcom Corporation (NASDAQ: BRCM), AT&T Inc. (NYSE: T) and Ebay Inc. (NASDAQ: EBAY) because they all share the same horrifically downtrending charts!
I've already written about how you should avoid these kinds of stocks, but I know many of you are already down too much to even contemplate getting out now. Luckily for you, there now looks to be a glimmer of hope.
Qualcomm (NASDAQ: QCOM) lost a patent ruling against rival Broadcom (NASDAQ: BRCM). That was some time ago. It prevents Qualcomm from selling certain chips in the US. That hurts its profits and makes its handset partners very unhappy.
Things got worse for the wireless chip company. An appeals court turned down its request to temporarily start selling the chips again. According toThe Wall Street Journal, "The U.S. Court of Appeals for the Federal Circuit, without providing details, ruled Tuesday that Qualcomm had not met its burden of proof to win a stay pending appeal of the injunction."
Qualcomm's bad patent habits have it in court cases against its largest customer, Nokia (NYSE: NOK), as well as Broadcom. That creates a nightmare for shareholders.
Although handset sales may be slowing a bit. Qualcomm has a wonderful business providing chips and software to the industry. That franchise took its stock from $15 less than five years ago to $53 in mid-2006. Disputes with customers and rivals have helped push that share price down to under $38.
With the new court ruling,Qualcom's share price is likely to stay down a lot longer.
Douglas A. McIntyre is an editor at 247wallst.com.
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MOST NOTEWORTHY: European banks, the Paper and Forest Products sector, Kindred Healthcare and Convergys were today's noteworthy upgrades: 
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Editor's Note: This post comes courtesy of Sean Udall, a wise player in the tech field. For more, visit 
Before the bell: Futures steady ahead of payroll report.gif){kind=logo}
Here are some highlights from this past week's 
No matter how hard I promote my 
Comfort Zone Investing: Exploit volatility with constant dollar investing
Merck earnings preview: No miracles expected
Apple reports Monday -- buy AAPL before earnings?
