MOST NOTEWORTHY: Webster Financial, Eaton and Macrovision were today's noteworthy upgrades:
Keefe Bruyette upgraded shares of Webster Financial (NYSE: WBS) to Outperform from Market Perform on valuation as they feel the company is adequately capitalized and in a position to withstand the weakening credit markets.
JP Morgan upgraded Eaton (NYSE: ETN) to Overweight from Neutral citing bullish management comments at its conference last week.
Piper upgraded Macrovision (NASDAQ: MVSN) to Buy from Neutral citing the closure of the Gemstar deal.
OTHER UPGRADES:
Lehman upgraded U.S. stocks to Overweight from Underweight.
Goldman added Hess Corp (NYSE: HES) and Mosaic (NYSE: MOS) to its Conviction Buy List.
Novo Nordisk (NYSE: NVO) was raised at HSBC to Neutral from Underweight.
MOST NOTEWORTHY: California Pizza, Lawson Software and Bare Escentuals were today's noteworthy initiations:
Oppenheimer initiated California Pizza (NASDAQ:CPKI) with a Perform rating. The firm is neutral on the stock given the company's exposure to California and diminishing returns in new markets.
KeyBanc initiated Lawson Software (NASDAQ:LWSN) with a Hold based on expectations that 1H09 will be challenged by a TTM sales headcount decline and the difficult IT spending environment.
William Blair assumed Bare Escentuals (NASDAQ:BARE) with an Outperform rating. The firm estimates the company owns only a modest single-digit share of the nearly $9B U.S. cosmetics market, making its market opportunity attractive.
OTHER INITIATIONS:
Citigroup initiated Hess Corp (NYSE:HES) with a Hold rating and $133 target.
NetSuite (NYSE:N) was started with a Sell rating and $14 target at Piper.
Morgan Keegan initiated Berry Petroleum (NYSE:BRY) with an Outperform rating.
MOST NOTEWORTHY: Citizens Republic Bancorp, Hess Corp and Sanderson Farms were today's noteworthy upgrades:
Keefe Bruyette upgraded shares of Citizens Republic Bancorp (NASDAQ: CRBC) to Outperform from Market Perform on valuation following yesterday's sell-off, which they attribute in part to its removal from the Dow Jones Select Dividend Index. Shares were also raised to OUtperform from Perform at Oppenheimer following the sell-off.
Goldman upgraded Hess (NYSE: HES) to Buy from Neutral citing the company's leverage to higher oil prices. The firm said oil is likely to hit $150-$200/bbl in the next 6-24 months.
Stephens upgraded shares of Sanderson Farms (NASDAQ: SAFM) to Overweight from Equal Weight as they expect industry fundamentals to improve in FY09.
OTHER UPGRADES:
Baird raised Stellent (NASDAQ: STEL) to OUtperform from Neutral.
Friedman Billings upgraded Preferred Bank (NASDAQ: PFBC) to Market Perform from Underperform.
Agco (NYSE: AG) was upgraded at Goldman to Buy from Neutral.
Lehman upgraded SLM Corp (NYSE: SLM) to Overweight from Equal Weight.
MOST NOTEWORTHY: Garmin, Thomson Reuters and Heritage-Crystal Clean were today's noteworthy initiations:
Garmin (NASDAQ: GRMN) was initiated with a Neutral rating at JP Morgan. The firm sees risk to 2008 Street estimates given the consumer slowdown in the U.S. and potential ASP and margin pressure as channel inventory is worked down.
Morgan Stanley assumed Thomson Reuters (NASDAQ: TRIN) with an Underweight rating and expects revenue growth in the company's financial business to slow sharply into 2009.
William Blair believes Heritage-Crystal Clean (NASDAQ: HCCI) has the opportunity to gain market share over the next several years as a result of its differentiated parts-cleaning programs, strong sales organization, and experienced management team. Shares were assumed with an Outperform rating.
OTHER INITIATIONS:
Lehman initiated Dell (NASDAQ: DELL) and Sun Microsystems (NASDAQ: JAVA) with Equal Weight ratings and targets of $20 and $17 and Apple (NASDAQ: AAPL), IBM Corp (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ) with Overweight ratings and targets of $195, $144 and $59, respectively.
Pacific Growth started Spectranetics (NASDAQ: SPNC) with a Neutral rating.
Merrill reinstated Chevron (NYSE: CVX), ExxonMobil (NYSE: XOM) and Hess Corp (NYSE: HES) with Buy ratings and price targets of $110, $105 and $125, respectively.
This market is tough. Pros and novices alike are having a tough time. Particularly in a down market, a market commentators like to call a ""stock picker's market," I find it illustrative to dig deeper into the holdings of those special professional money managers that have found a way to make a go of it.
Take the CGM Focus (CGMFX) fund. This fund consistently shows up at the top of 1-year, 3-year, and multi-year best performers. CGM Focus has returned on average 37% per year for the past five years. While this is absolutely no guarantee that it will continue to perform like this, fund manager Chuck Heebner seems to have the special sauce -- at least for now.
So, what has been so successful for the fund?
Commodity picks like fertilizer plays Potash (NYSE: POT) and Mosaic (NYSE: MOS) have been big positions and have been big winners. Steel plays like US Steel (NYSE: X) have performed very nicely for CGM as well.
Looking at what worked is somewhat like looking into a rear-view mirror. These gains were in the past. What's Heebner and team buying now?
MOST NOTEWORTHY: Intel, Respironics and First Horizon were today's noteworthy downgrades:
JP Morgan lowered its rating on Intel (NASDAQ:INTC) to Neutral from Overweight, as their checks indicate a late-quarter slowdown for Intel in order rates from the PC end market, which offset the upside the company experienced in earlier in Q4.
Banc of America downgraded shares of Respironics (NASDAQ:RESP) to Neutral from Buy to reflect the acquisition by Philips (NYSE:PHG).
Friedman Billings downgraded First Horizon (NYSE:FHN) to Underperform from Market Perform, citing its exposure to home equity and construction loans and mortgage banking operations. The firm adds that it expects the company to cut its quarterly dividend.
Hess (NYSE: HES) closed at a record high of $104.40 Wednesday. WTI Crude futures are down 0.30% to $95.68 according to Bloomberg. HES overall option implied volatility of 46 is above its 26-week average of 38 according to Track Data, suggesting larger price risks.
Occidental Petroleum (NYSE: OXY) closed at record high of $78.06 Wednesday. OXY operates in two segments: oil-gas and chemicals. OXY has a market cap of $64 billion with long-term debt of $1.7 billion. OXY overall option implied volatility of 34 is near its 26-week average according to Track Data, suggesting non-directional price fluctuations.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
MOST NOTEWORTHY: Kindred Healthcare, Five Star Quality, Corporate Executive Board, Deckers Outdoor and Discover were today's noteworthy upgrades:
Jefferies upgraded shares of Kindred Healthcare Inc (NYSE: KND) to Buy from Hold on valuation as they believe the risk/reward is attractive given good near-term earnings visibility and reasonable prospects for legislation to remove a significant reimbursement overhang.
The firm also upgraded Five Star Quality Inc (AMEX: FVE) to Buy from Hold following a meeting with management, to reflect the company's improving occupancy and better cost controls.
Deutsche Bank upgraded shares of The Corporate Executive Board Company (NASDAQ: EXBD) to Buy from Hold as they believe the company is positioned for strong growth in 2008.
Nollenberger upgraded shares of Deckers Outdoor Corporation (NASDAQ: DECK) to Buy from Neutral, as they believe the UGG brand will continue to outperform expectations both domestically and internationally.
MOST NOTEWORTHY: Mattel (MAT), UnitedHealth (UNH), Alcoa (AA), 1-800-Flowers.com (FLWS) and Marathon Oil (MRO) were today's noteworthy upgrades:
Piper upgraded shares of Mattel (NYSE: MAT) to Outperform from Peer Perform on valuation and improving fundamentals and notes that product recalls have historically not had a lasting impact on sales.
Goldman upgraded UnitedHealth (NYSE: UNH) to Neutral from Sell on valuation and expectations for improved profitability in 2H07.
Alcoa (NYSE: AA) was upgraded to Outperform from Market Perform at Friedman Billings on valuation and expectations for a favorable report next week.
JMP Securities has increased confidence in 1-800-Flowers.com's (NASDAQ: FLWS) management initiatives to drive leverage and operating margins following the Q4 report, upgrading shares to Outperform from Market Perform.
Lehman upgraded shares of Marathon Oil (NYSE: MRO) to Overweight from Equal-Weight on valuation and expectations for strong oil and gas production growth...
OTHER UPGRADES:
NBTY Inc (NYSE: NTY) was upgraded to Neutral from Underperform at JP Morgan.
ThinkEquity upgraded F5 Networks (NASDAQ: FFIV) to Buy from Accumulate.
Goldman upgraded the oil services sector to Attractive from Neutral based on the recent pullback; Sunoco (NYSE: SUN) and Hess (NYSE: HES) were also upgraded to Buy from Neutral.
MOST NOTEWORTHY: Advantest (ATE), RightNow Technologies (RNOW), Mattson Technology (MTSN), Akamai Technologies (AKAM) and P.F. Chang's (PFCB) were today's noteworthy downgrades:
Matrix downgraded Advantest (NYSE: ATE) to Strong Sell from Hold; the firm doesn't expect Advantest's profits to improve in the near-term after chip makers indicated they plan to cut capital spending.
RightNow Technologies (NASDAQ: RNOW) was cut to Sector Perform from Outperform at Pacific Crest to reflect the company's poor execution.
Mattson Technology (NASDAQ: MTSN) was downgraded to Sell from Buy at American Technology; The firm said Q2 results were strong but bookings and gross margin outlook were weaker due to memory spending weakness.
Credit Suisse downgraded P.F. Chang's (NASDAQ: PFCB) to Market Weight from Overweight at Thomas Wiesel to reflect below plan new store performance for the third consecutive year at Pei Wei...
Barron's Online's "Inside Scoop" column reported that Hess Corporation (NYSE: HES) CEO John Hess recently bought more $1M worth of Dow Chemical Company (NYSE: DOW), and now directly owns 23,350 DOW shares.
The Financial Times reported that the European Union is concerned that Google Inc (NASDAQ: GOOG) may be skirting European privacy laws by keeping data on Internet searches for too long.
OTHER PAPERS:
The U.S. Navy awarded an $11.9M contract to Force Protection Inc (NASDAQ: FRPT) to build and deliver 14 next-generation armored vehicles, according to the Associated Press.
From BusinessWeek's "Inside Wall Street" section:
In spite of its problems, Amgen Inc (NASDAQ: AMGN) is a long-term value play, according to Joseph Battipaglia, chief investment officer at Ryan Beck's Washington Crossing Advisors unit.
Big truckers see YRC Worldwide Inc (NASDAQ: YRCW) as a tempting asset play with "compelling earnings power and potential value," according to Justin Yagerman of Wachovia Securities.
MOST NOTEWORTHY: Hess Corp (HES), American Home Mortgage Investment Corp (AHM) and Anglo American plc (AAUK) were today's noteworthy downgrades.
Lehman Brothers downgraded Hess Corp (NYSE: HES) to Underweight from Equal-Weight based on valuation.
American Home Mortgage Investment Corp (NYSE: AHM) was cut to Underperform from Market Perform at Keefe Bruyette, to Market Perform from Outperform at Friedman Billings, to Equal-Weight from Overweight at Lehman Brothers, to Sell from Hold at Citigroup and to Hold from Buy at Deutsche Bank.
Anglo American plc (NASDAQ: AAUK) was downgraded to Underperform from Market Perform at BMO Capital Markets based on valuation.
OTHER DOWNGRADES:
Murphy Oil Corp (NYSE: MUR) was cut to Equal-Weight from Overweight at Lehman.
MOST NOTEWORTHY: Bristol Myers Squibb Co (BMY), Krispy Kreme Doughnuts Inc (KKD), Martha Stewart Living Omnimedia Inc (MSO) and New Century Financial Corp (NEW) were some of today's more notable upgrades:
UBS upgraded shares of Bristol Myers Squibb Co (NYSE: BMY) to Buy from Neutral. The firm finds the recent pullback an attractive buying opportunity given the possibility of a takeover approach. The broker also believes BMY will likely win its Plavix patent case.
CIBC resumed coverage of Krispy Kreme Doughnuts Inc (NYSE: KKD) with a Sector Performer rating, up from its recent Underperformer rating, citing resolutions to numerous accounting and legal issues for the upgrade.
Morgan Stanley upgraded Martha Stewart Living Omnimedia Inc (NYSE: MSO) to Equal Weight from Underweight.
Bear Stearns upgraded New Century Financial Corp (NYSE: NEW) to Peer Perform from Underperform saying downside risk is limited to $10-$11, but sees upside if business stabilizes and liquidity improves...
OTHER UPGRADES:
JP Morgan raised Eaton Vance Corp (NYSE: EV) to Neutral from Underweight to reflect the company's strong fund sales and continued capital returns to shareholders.
AG Edwards replaced Exxon Mobil Corp (NYSE: XOM) on its Focus Portfolio, adding Chevron Corp (CVX) to reflect the company's improved financial strength and attractive valuation.
Lehman Brothers upgraded Apple Inc (NASDAQ: AAPL) to Overweight from Equal-Weight with a $105 target based on the recent pullback in shares.
Friedman Billings raised Hess Corp's (NYSE: HES) rating to Outperform from Market Perform, based on growth reserves and an improving outlook.
Merrill Lynch upgraded Logitech International SA (NASDAQ: LOGI) to Buy from Neutral.
Matrix upgraded Abbott Laboratories (NYSE: ABT) to Buy from Hold on valuation.
MOST NOTEWORTHY: Johnson & Johnson (JNJ) led this morning's list of initiations.
Goldman Sachs reinstated Johnson & Johnson (NYSE: JNJ) with a Buy rating and $75 target.
OTHER INITIATIONS:
FormFactor Inc. (NASDAQ: FORM) was started at AG Edwards with a Buy rating and $50 target; the firm said FormFactor's advanced wafer probe cards offer semiconductor manufacturers a cost effective and yield enhancing solution for the wafer probe test process.
Bank of America initiated Peabody Energy (NYSE: BTU) with a Buy rating and $53 target based on the company's large PRB operations and low production costs.
Soleil initiated shares of Hess Corp (NYSE: HES) with a Buy rating and $62 target.
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MOST NOTEWORTHY: Webster Financial, Eaton and Macrovision were today's noteworthy upgrades:.gif){kind=logo}
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