Citigroup upgraded shares of Salesforce.com (NYSE: CRM) to Buy from Hold on valuation following the recent weakness and expects positive seasonality in the second half of 2008.
Gilat Satellite (NASDAQ: GILT) was upgraded to Outperform from Market Perform at William Blair on valuation.
Cott Corp (NYSE: COT) was raised at UBS to Neutral from Sell.
EOG Resources (NYSE: EOG) was upgraded to Market Perform from Underperform at Bernstein.
Jefferies downgraded shares of Marvell Tech (NASDAQ: MRVL) to Hold from Buy on HDD inventory concerns and share loss at Research in Motion (NASDAQ: RIMM) after checks indicated MRVL likely lost the design for the RIM Javelin to Freescale. The firm lowered their target to $15 from $22.
Oppenheimer downgraded Integrated Device (NASDAQ: IDTI) to Perform from Outperform as they believe the upcoming Intel (NASDAQ: INTC) server memory transition will pressure shares for several quarters.
Broadpoint downgraded shares of Healthaways (NASDAQ: HWAY) to Neutral from Buy as they see few near-term catalysts.
The energy debate rages on as oil and gas futures bounce around with 30% corrections. Which side of the energy debate are you on? Bears say that oil and gas prices are coming back down to earth. Speculators and hedge funds bid them up, global demand is slowing and alternative forms of energy will soon replace the fossil fuels we've come to depend upon. Bulls argue that oil and gas supplies are dwindling at the same time that the emerging market economies (China, India, Brazil and 20 others) need more. As their middle class population builds they too will want cars, air conditioning and electricity and demand will increase. Most oil reserves are in countries with unstable governments and when geopolitical events get ugly, prices tend to skyrocket.
I'm a long term energy bull -- 10% of my money has been in energy stocks for the last several years and today I maintain that allocation for two reasons. First, I believe in five years, oil and gas prices will be higher than they are today. Second, owning energy is a great hedge against other asset classes like stocks, the US dollar, and inflation.
No one knows which way energy prices will go next week or month so I continually rebalance my portfolio. As my energy stocks rise, I trim them and when they fall, I add to them. If my portfolio goes to 12% energy, I sell them back down to 10% and vice versa.
Now comes the easiest part – which stocks do I pick? Easy you say? Yes – because I don't worry about stock picking due to a miraculous new invention I'll discuss below. I own three energy stocks: the U.S. Oil & Gas Exploration & Production Index (NYSE:IEO), the U.S. Oil Equipment & Services Index(NYSE:IEZ), and S&P Global Energy (NYSE:IXC). Through these three stocks, I own about 200 energy stocks in precise allocation percentages to parts of the energy sector, weighted according to my own preferences – 60% is in IEO, 30% is in IEZ and 10% is in IXC. Why pick stocks when I can own them all? Here's what I mean.
So the earnings crunch continues, and here's a look at some companies scheduled to report results this week that are anticipated to be big winners and losers in terms of earnings growth.
Analysts surveyed by Thomson Financial expect the following to report strong earnings growth when compared to the same period of the previous year.
Apache Corp. (NYSE: APA): $4.10 EPS (+53.9%) on revenue of $3.8 billion (+54.6%)
EOG Resources Inc. (NYSE: EOG): $2.34 EPS (+50.0%) on revenue of $1.7 billion (+62.2%)
Avon Products Inc. (NYSE: AVP): $0.47 EPS (+44.7%) on revenue of $2.6 billion (+11.5%)
MOST NOTEWORTHY: Diebold, EOG Resources and Barnes & Noble were today's noteworthy downgrades:
Jefferies downgraded shares of Diebold (NYSE: DBD) to Hold from Buy on valuation following United Tech's (NYSE: UTX) offer, as they do not see enough upside over the near-term to maintain a Buy rating.
Oppenheimer cut EOG Resources (NYSE: EOG) to Underperform from Perform on valuation, as they think the 20% run-up post analyst meeting was unjustified.
Barnes & Noble (NYSE: BKS) was lowered to Underweight from Neutral at JP Morgan, as they believe Street SSS expectations are too high given slowing sales and secular margin pressure.
Bernstein also upgraded shares of BP PLC (NYSE: BP) and BG Group (NYSE: BRG) to Outperform from Market Perform.
Check Point Software Technologies (NASDAQ: CHKP) was upgraded to Outperform from Market Perform at Friedman Billings, citing checks that indicate a strong product cycle for the company's beefed up VPN/firewall product portfolio.
ValueClick (NASDAQ: VCLK) was upgraded at Citigroup to Buy from Hold on valuation, as they believe the recent correction provides a compelling entry point.
EOG Resources Inc. (NYSE: EOG) is one of the country's largest oil and natural gas companies in the U.S., headquartered in, you guessed it, Texas. The company's most recent earnings report, for 2Q 2007, is a challenging read. Some numbers are up, some are down. Overall, the numbers are headed in the right direction so that CEO Mark Papa has raised FY guidance for total growth, all of it organic and none by acquisition, from 10% to 11.5%. This is great news considering how challenging 2007 has been for EOG Resources compared to 2006.
1Q 2007 net income dropped by 50% to $216.8 million from 1Q 2006, despite the fact that 1Q 2007 natural gas production increased by 21%. 2Q 2007 net income improved to $306.1 million from 1Q 2007 net income, but was still less than 2Q 2006 net income of $329.6 million. EOG Resources lost a lot of ground with its financial commodity contracts in 2Q 2007. These contracts amounted to $18.6 million for the quarter, compared to $47.3 million in the previous quarter, which was itself hit with a $40 million drop in prices for natural gas. EOG is divesting itself of some of its assets, including its shallow gas holdings in Appalachia, in order to focus on shale gas opportunities that have the potential for greater production, and hence greater return on investment.
Despite price decreases, EOG Resources continues to increase natural gas production quarter over quarter. Total North American natural gas production for the first half of 2007 is up 7% from the same period a year ago. EOG has had significant capital expenditures for a new natural gas processing facility in east Texas, a facility necessitated by increases in natural gas production to compensate for price declines. EOG Resources continues to invest in technology that increases initial natural gas production rates and increases the efficiency of the recovery process so that more natural gas can be produced without the expense of digging additional wells.
The stock has been up and down since opening the year at $60.66. In mid June the stock was trading up 30% at just over $80 per share. Since then the stock has lost ground, closing Friday at $71.58, but is still up about 15% for the year.
MOST NOTEWORTHY: Wyeth (WYE), Luminent Mortgage Capital (LUM), CheckFree (CKFR), EOG Resources (EOG) and K-Swiss (KSWS) were today's noteworthy downgrades:
Cowen downgraded Wyeth (NYSE: WYE) to Neutral from Outperform based on limited long-term limited visibility.
JP Morgan downgraded shares of Luminent Mortgage (NYSE: LUM) to Underweight from Neutral citing difficult CMO and CDO market conditions.
JP Morgan downgraded CheckFree (NASDAQ: CKFR) to Neutral from Overweight following the company's acquisition by FiServ (FISV).
Matrix cut shares of EOG Resources (NYSE: EOG) to Sell from Buy to reflect lower natural gas prices and increasing costs.
Matrix believes soft demand for athletic shoes is leading to declining sales for K-Swiss (NASDAQ: KSWS), and cut shares to Sell from Buy...
OTHER DOWNGRADES:
JMP Securities downgraded CapitalSource (NYSE: CSE) to Outperform from Strong Buy.
Oppenheimer has turned negative on oil and gas names for the near-term, as they now believe the downside risk exceeds upside potential; they cut shares of Apache Corp (NYSE; APA), BP PLC (NYSE: BP), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM), among others, to Neutral from Buy.
MOST NOTEWORTHY: ConocoPhillips (COP), Transocean (RIG), LifePoint Hospitals (LPNT), EOG Resources (EOG) and Quicksilver Resources (KWK) were today's noteworthy downgrades:
Banc of America cut ConocoPhillips (NYSE: COP) to Neutral from Buy on valuation and the lack of upstream catalysts.
Deutsche Bank cut Transocean (NYSE: RIG) to Hold from Buy based on the GlobalSantaFe (GSF) merger.
Raymond James downgraded LifePoint Hospitals (NASDAQ: LPNT) to Market Perform from Strong Buy following the company's cut in guidance. Merrill Lynch downgraded LifePoint Hospitals to Neutral from Buy.
Citigroup downgraded EOG Resources (NYSE: EOG) and Quicksilver Resources (NYSE: KWK) to Sell from Hold as both trade above the sector averages for NAV and cash flow and neither is well protected in the likely event commodity prices deteriorate...
OTHER DOWNGRADES:
BMO Capital downgraded Biovail (NYSE: BVF) to Market Perform from Outperform.
Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.
For his new top pick, National Fuel Gas Co. (NYSE: NFG), he says, "I love companies with 'hidden assets,' things that have been lying around gathering dust but suddenly turn into something very valuable. It's like finding an old Mickey Mantle baseball card in Dad's attic.
"One stock that is a hidden asset in the Appalachians is National Fuel Gas. Like an old baseball card, it's been around a long time. NFG incorporated in 1902, though its predecessor companies are much older. It is an integrated gas utility. This means it is involved in every aspect of natural gas, from the bottom of the well to the burner tip.
"NFG has its own exploration and development company, with oil and gas reserves across many states (45% of production is oil). It has a regulated utility serving 727,000 customers in New York and Pennsylvania.
"It owns nearly 3,000 miles of pipeline, along with 32 storage fields. NFG also owns over 100,000 acres of black cherry hardwood in Pennsylvania. Finally, NFG has a small energy broker business with some 25,000 customers.
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Analyst upgrades:
The energy debate rages on as oil and gas futures bounce around with 30% corrections. Which side of the energy debate are you on? Bears say that oil and gas prices are coming back down to earth. Speculators and hedge funds bid them up, global demand is slowing and alternative forms of energy will soon replace the fossil fuels we've come to depend upon. Bulls argue that oil and gas supplies are dwindling at the same time that the emerging market economies (China, India, Brazil and 20 others) need more. As their middle class population builds they too will want cars, air conditioning and electricity and demand will increase. Most oil reserves are in countries with unstable governments and when geopolitical events get ugly, prices tend to skyrocket. 
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