Keefe Bruyette upgraded shares of ING Group (NYSE: ING) to Outperform from Market Perform after upgrading the European insurance sector to Overweight from Neutral due to improved risk management.
Keefe Bruyette also upgraded Wells Fargo (NYSE: WFC) to Market Perform from Underperform to reflect the company's national footprint if the Wachovia (NYSE: WB) deal goes through.
JP Morgan upgraded Dollar Tree (NASDAQ: DLTR) to Overweight from Neutral citing top line performance, growth profile and valuation, among other reasons.
Jabil Circuit (NYSE: JBL) was upgraded to Outperform from Neutral at Credit Suisse.
Amylin Pharma (NASDAQ: AMLN) was raised to Hold from Sell at Citigroup.
Louisiana Pacific (NYSE: LPX) was upgraded at RBC Capital to Sector Perform from Underperform.
Analyst downgrades:
Jefferies downgraded shares of Ecolab (NYSE: ECL) to Hold from Buy and lowered its target to $50 from $55 to reflect risks to the company's earnings outlook from the weakening economy.
Coca-Cola (NYSE: KO) was cut to Hold from Buy at Deutsche Bank as they believe the economic slowdown will bring slower volumes. Coca-Cola's target was lowered to $56 from $64.
Just one day after investors ran up stocks in expectation of a bailout plan, U.S. stock futures dropped significantly Friday as the $700 billion bailout plan wasn't approved after all and as Washington Mutual was seized by regulators in the country's largest-ever failure. Discussions over the bailout are still ongoing, while JPMorgan Chase was forced to acquire the rest of WaMu. To add to an already tense environment, the final release of the second-quarter GDP is due at 8:30 a.m. EDT, and the September University of Michigan's consumer confidence index is due out at 10 a.m EDT.
Washington Mutual Inc. (NYSE: WM) was seized by the Federal Deposit Insurance Corp. on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. (NYSE: JPM) for $1.9 billion. It was the largest failure by a U.S. bank. JPMorgan also said it would raise another $8 billion through the sale of stock. WM shares are down nearly 85%, JPM's down over 2% in pre-market trading.
Research In Motion Ltd. (NASDAQ: RIMM) posted a sharply higher quarterly profit on Thursday, in line with expectations, but gave a forecast that was below expectation. Investors are concerned that as the economy slows, RIM's large corporate clients could scale back BlackBerry purchases and upgrades. Deutsche Bank downgraded RIM from Hold to Sell, saying it relies more on hardware sales thse days, which means new product launches in this environment could worsen. RBC Capital Markets also downgraded RIM from Outperform to Sector Perform, but Credit Suisse, upgraded RIM from Underperform to Neutral. RIMM shares are down over 20% in pre-market trading.
Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders KB Home (NYSE: KBH) and Lennar Corp. (NYSE: LEN) as investors look for any sign that the housing sector has bottomed (home sales numbers are also due out this week; see below). Analysts surveyed by Thomson Financial anticipate that both companies will report that they narrowed their losses in the most recent quarter.
KB Home's expected $1.25 per share loss, on revenue of $725.5 million, compares to the previous quarter loss of $3.30 and to a year-ago loss of $6.19. However, KB Home's losses in the past few quarters have been deeper than expected. The Los Angeles-based homebuilder's long-range earnings growth forecast is 10.5%, less than the S&P 500. Analysts continue to recommend holding KB Home, and have for at least 120 days. Shares, however, reached a new 52-week high of $31.69 on Friday, and they are up 10.5% year to date.
Lennar is expected to post a loss of 52 cents per share, on revenue of $1.1 billion. That compares to the previous quarter's per-share loss of 76 cents and to a year-ago loss of $3.25. While Lennar also has tended in the past few quarters to miss expectations, the Miami-based company managed a positive surprise in the first quarter of 2008. Lennar's long-range earnings growth forecast is 10.3%, about the same as KB Home's. Analysts also recommend holding Lennar. Friday, shares of Lennar also reached a 52-week high, $27.75, but they are down 6.4% year to date.
Jabil Circuit (NYSE: JBL) is a leading electronics manufacturing services firm, providing comprehensive design, manufacturing and product management services to global electronics and technology companies. The firm works for original equipment makers in the automotive, storage, medical, networking, telecommunications, computer and consumer products industries. Top customers include Cisco Systems (NASDAQ: CSCO), Hewlett-Packard (NYSE: HPQ) and Nokia (NYSE: NOK).
The company had good news for investors earlier in the week, when it reported fiscal Q3 EPS of 26 cents and revenues of $3.09 billion. Analysts had been looking for 20 cents and $3.08 billion. Management also guided Q4 EPS to 29-33 cents (29 cent consensus) and Q4 revenues to $3.2-$3.3 billion ($3.19B consensus). Credit Suisse subsequently reiterated its "neutral" rating on the stock, but RBC Capital Markets repeated an "outperform" recommendation and Needham said "buy" again.
Reporting today are the agrichemicals firm Monsanto (NYSE: MON) -- AP Preview, and after the close, software giant Oracle (NASDAQ: ORCL) and Nike (NYSE: NKE).
Reported Tuesday:
Jabil Circuit (NYSE: JBL) shares are up nearly 11% in premarket trading after the company reported its profit soared as revenue grew and costs declined, topping third-quarter earnings estimates. Merrill Lynch upgraded Jabil from Neutral to Buy.
Red Lobster operator Darden Restaurants (NYSE: DRI) shares are up 1.9% in premarket trading after it also topped quarterly earnings estimates, postinga higher quarterly profit, boosted by the Olive Garden chain, and lower costs that helped raise operating profit at its Red Lobster chain.
Meanwhile Pier 1 Imports (NYSE: PIR) shares were also nearly 5% higher in after-hours trading Tuesday after the retailer said it abandoned plans to take over rival home furnishings retailer Cost Plus (NASDAQ: CPWM) for $88 million.
U.S. stock futures were lower early Tuesday ahead of the two-day Federal Reserve policy meeting. Meanwhile, oil climbed on supply concerns following further Nigeria unrest and new Iran sanctions and steadied above $137 a barrel. UPS (NYSE: UPS) also gave a profit warning.
U.S. stocks ended almost flat Monday as the market digested some deal activity but remained concerned over oil prices with many investors staying on the sidelines ahead of the Fed meeting. Both the Dow industrials and the S&P 500 ended nearly the same as Friday with the Nasdaq Composite dropping 20 points, or 0.85%.
Economic releases today include June consumer confidence to be reported at 10:00 a.m. EDT. Consumer confidence probably fell this month to the lowest level in more than 15 years, meaning many will try to economize on their spending. The Case-Shiller report on April home prices also is on tap.
Mostly, though, investors will be concerned with the Fed's decision and statement Wednesday. While most on Wall Street believe the Fed will hold rates unchanged this time, many think the Fed will discuss a shift -- to some extent -- to focus more on inflation than the slowdown as well as hint at future rate hikes. The Fed's balancing act between trying to stimulate the economy while keeping inflation under check is becoming a more difficult task by the day.
It is going to be an interesting week. The Fed and oil will be at odds, and tempers are sure to flare on the trading floors. There are many earnings and eco reports we are looking at, and it is hard to choose which will be front and center. Traders and investors will be closely following every move by the Fed as they will be releasing a policy statement at 2:15 p.m. on Wednesday.
Also, stocks within the homebuilders group will be front and center as a few key players will share their earnings results. Have you seen the charts of these companies lately? Click for a good comparison. And after you take a peek, you may also wonder if they are actually stock charts or ski slopes. So with that as the backdrop, here are a few names that may actually be undercovered and worth a look.
Tuesday, June 24
Anything related to the automobile industry has been under siege of late, and I can't imagine how that will change anytime soon. HB Fuller Co. (NYSE: FUL) is involved in the manufacturing of the industrial performance/adhesive products for the assembly/packaging and automobile markets. The fact that the economy is lagging would lead one to the realization that, unless we see a quick turnaround of epic proportions, the reality of a lower share price will come with the next earnings release. Several down days of late have also had increasing volume, and that is not a good sign for a stock that is beginning to show signs of breaking down. Even so, First Call is showing a $0.45 per share quarterly estimate on $347 million of revenue.
Most of us would be thrilled to invest in a stock that doubles our money, but it certainly isn't easy to find these stocks. According to data provider Capital IQ, in the last year only 1.4% of 6,700 stocks trading on the U.S. exchanges were able to double their price.
BusinessWeek started hunting some of these potentially great stocks by asking fund managers to choose those firms expected to provide 100% returns in the next few years. Of course, the resulting list is by no means a sure thing, since major factors such as the ongoing credit crisis and challenging market conditions could affect results in unpredictable ways.
But let's look at some of the strategies used when picking high-potential stocks.
Mary Lisanti, portfolio manager at the Adams Harkness Small Cap Growth Fund, focuses on young companies in the small-cap segment. She points to stocks like Rubicon Technology (NASDAQ: RBCN) and Titan Machinery Inc. (NASDAQ: TITN), saying that investors can have a big advantage when they recognize potential before the market does.
Just yesterday we were all scratching our heads and wondering where the bears had gone. It seems maybe they were just out on a binge session. Today was the playbook day of what we had seen so regularly before last week with financials and tech lower, and gold, oil and commodities higher. Oil rose a sharp $4.73 to $105.95 on lower than expected inventory numbers, and gold was up $11.00 at $949.50 in late day trading on the weak U.S.-Peso.
February's Durable Goods brought on more pessimism from the start of the session after posting a 1.7% drop, although this has always been one of the more volatile economic numbers in good times and in bad. The report out of the Commerce Department showed new home sales fell another 1.8% in a fourth consecutive decline, although that was slightly better than many were looking for. Below are the unofficial closing prices for U.S. index levels:
MOST NOTEWORTHY: Jabil Circuit, Aircastle, Genesis Lease and P.F. Chang's were today's noteworthy downgrades:
JP Morgan downgraded shares of Jabil Circuit (NYSE: JBL) to Underweight from Overweight following the lower-than-expected guidance, as they believe the company is seeing end market weakness in most of its markets. Shares were also downgraded at Thomas Weisel to Market Weight from Overweight and at Credit Suisse to Neutral from Outperform following the disappointing guidance.
JP Morgan also downgraded shares of Aircastle (NYSE: AYR) and Genesis Lease (GLS) to Neutral from Overweight to reflect the continued credit and equity market challenges faced by both companies.
Friedman Billings downgraded shares of P.F. Chang's (NASDAQ: PFCB) to Underperform from Market Perform as they believe 2008 will be a challenging year for all casual dining restaurant companies and that the valuation is expensive at current levels.
Shares of electronic parts manufacturer Jabil Circuit Inc. (NYSE:JBL) have been plunging this morning, despite the firm posting better-than-expected second quarter earnings per share. Hurting the stock this morning is the company's third-quarter guidance, which came in well below analysts' predictions.
Jabil Circuit reported yesterday evening a second-quarter loss of $24 million or 12 cents per share, hurt by restructuring charges. Excluding costs related to restructuring and impairment, Jabil's earnings number would have come at 20 cents per share. Analysts' forecast (which typically exclude one time items) was for 13 cents per share in the quarter.
The company posted a 4% rise in its second-quarter revenue to $3.1 billion, up from $2.9 billion a year earlier. Analysts, on average, expected Jabil Circuit show revenue of $3.05 billion in the quarter, according to FactSet Research.
Jabil Circuit (NYSE: JBL) is recently trading at $9.90 in pre-open trading, below its close of $11.38.
JBL lowered it fiscal-year guidance and forecast third-year quarter below analyst expectations.
Jefferies says: "The combination of a challenging economy, a slowdown in new program ramps and a reconfiguration of the consumer electronics business continues to keep us cautious on JBL."
JBL overall option implied volatility of 55 is above its 26-week average of 43 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
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Analyst upgrades:
Just one day after investors ran up stocks in expectation of a bailout plan, U.S. stock futures dropped significantly Friday as the $700 billion 
Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders 
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Most of us would be thrilled to invest in a stock that doubles our money, but it certainly isn't easy to find these stocks. 
Just yesterday we were all scratching our heads and wondering where the bears had gone. It seems maybe they were just out on a binge session. Today was the playbook day of what we had seen so regularly before last week with financials and tech lower, and gold, oil and commodities higher. .gif){kind=logo}
Shares of electronic parts manufacturer 
Jabil Circuit
Big Losers: 15 large stocks that have plummeted
What is going on with the markets? What should you do about it?
All bets are off -- stocks irrational downside 
