Merrill upgraded shares of General Motors (NYSE: GM) and Ford (NYSE: F) to Neutral from Underperform on expectations for fundamentals to improve in 2009.
Citigroup upgraded Chubb (NYSE: CB) and Travelers Group (NYSE: TRV) to Buy from Hold as they expect the company to benefit from the AIG (NYSE: AIG) fallout. The firm raised Chubb's target to $57 from $56 and Travelers Group's target to $51.50 from $49.50.
Credit Suisse upgraded shares of SAP AG (NYSE: SAP) to Outperform from Neutral as they believe margin expansion can drive higher profitability.
JetBlue (NASDAQ: JBLU) was upgraded to Buy from Hold at Argus.
NetLogic (NASDAQ: NETL) was upgraded to Buy from Neutral at Piper.
Analyst downgrades:
JP Morgan downgraded Eli Lilly (NYSE: LLY) to Underweight from Neutral citing the company's early stage pipeline and generic competition.
Merrill downgraded Unilever (NYSE: UL) to Neutral from Buy as they believe the incoming CEO is unlikely to bring a major restructuring or split up the company.
UBS believes US airlines estimates are too low and will move higher. The firm upgraded AirTran (NYSE: AAI), AMR Corp (NYSE: AMR), Continental (NYSE: CAL), Delta (NYSE: DAL) and Northwest (NYSE: NWA) to Buy from Neutral and JetBlue (NASDAQ: JBLU) to Neutral from Sell.
JMP Securities upgraded DealerTrack (NASDAQ: TRAK) to OUtperform from Market Perform as they believe 2H08 guidance represents a floor and that 2009 estimates are achievable, among other reasons.
Potash (NYSE: POT) and Mosaic (NYSE: MOS) were raised to Buy from Hold at Soleil.
Argus upgraded Seagate (NYSE: STX) to Buy from Hold on Friday.
Analyst downgrades:
Jefferies downgraded Citrix Systems (NASDAQ: CTXS) to Underperform from Hold as they do not see a catalyst for the company to grow into 2009 consensus estimates. The firm lowered their target price to $25 from $32.
Citigroup said following Lehman's (NYSE: LEH) bankruptcy, they expect a distressed-sale of American International's (NYSE: AIG) MBS portfolio, resulting in the worst quarter yet for the company. Shares were cut to Hold from Buy.
D.R. Horton (NYSE: DHI) was downgraded to Sell from Hold and Pulte Homes (NYSE: PHM) was downgraded to Hold from Sell at Citigroup.
Merrill downgraded Goldman Sachs (NYSE: GS) to Neutral from Buy and JP Morgan (NYSE: JPM) to Underperform from Neutral.
If a company can't sell its products or services anywhere else, why not put them on eBay (NASDAQ: EBAY)? A least that will open up sales to a huge audience.
According toThe Wall Street Journal, "JetBlue Airways Corp. (NASDAQ: JBLU) is auctioning off more than 300 roundtrip flights and six vacation packages this week on eBay, with opening bids set between five cents and 10 cents."
While the move may get JetBlue a lot of attention, it also reinforces the idea that air travel has become a commodity. High fuel prices has forced airlines to cut services from meals to free baggage. The public is already annoyed with the quality of the flying experience. Offering tickets on eBay is like auctioning off old lawn mowers or used cars. Airline tickets get lumped in with all the other junk. The move also fuels the perception that the number of people flying is falling which allows airlines to dump all those extra seats.
If JetBlue has any sense, it would auction off better service. People would probably pay for that. The promotion could last longer than a week. Passengers would be reminded that airlines have something to offer beyond $5 peanuts and $50 checked bags.
While those names could sound tempting for investors who may think they are cheap, BusinessWeek's Karyn McCormack reminds us that not everything that is cheap is a good bargain, and there are some risks that need to be taken into account.
One common problem for most of these stocks is that they trade under $10 for a reason. That reason is usually hardly any earnings growth, if any at all. And with a weak economy, these companies would have an even harder time to stimulate growth. Add to the mix the fact that institutional investors don't like to touch stocks under $10 and the potential for recovery is not good.
As Lehman Brothers Holdings Inc (NYSE: LEH) is about to report a second quarter loss of about $2B, the firm is closing in on raising over $5B in new capital, the Wall Street Journal reported. Once source of Lehman's new funding is reportedly the New Jersey Division of Investment.
The Financial Times reported that General Electric Company's (NYSE: GE) NBC Universal and British private equity firm GMT Communications Partners are expected to soon acquire Bigpoint, a German-based computer games website.
OTHER PAPERS:
According to the Independent, the credit crunch has cost the jobs of about 100 bankers at Barclays Plc (NYSE: BCS). The bank cut about 20 individuals on the leveraged finance team and will reportedly cut 80 more in investment banking and IT support.
Stock futures were higher early Wednesday morning as oil and other commodities declined, providing some relief.
U.S. stocks ended higher Tuesday, especially the tech heavy Nasdaq composite which rose 36 points, or a solid 1.5%. The Dow industrials and the broader measure S&P 500, rose 68 points, or 0.55%, and 9 points, or 0.68% respectively. A dramatic retreat in crude of more than $3 a barrel helped boost sentiment.
On the economic docket today is April durable goods order, which economists are expecting to show a further decline. The report is due to release at 8:30 a.m. EDT.
Weekly crude inventories, usually released Wednesdays, will be postponed due to the shortened week. Meanwhile, though, oil prices continued to decline, dropping below $127 a barrel Wednesday in Asia, extending the previous session's decline. It seems that the higher prices cut demand, which in turn, pressured prices back.
A man traveling on an employee buddy pass (and thus presumably flying for free) was ordered to sit in the bathroom of a packed JetBlue Airways Corporation (NASDAQ: JBLU) flight. He is now suing the company for $2 million.
Gokhan Mutlu claims that the pilot of a JetBlue flight from New York City to San Diego ordered him to sit in the bathroom after a flight attendant claimed his seat. The attendant apparently felt that her jump seat was uncomfortable; since Mutlu was not an employee, he couldn't sit in her jump seat. And on a full plane, that left the toilet as the only seating option on the five hour flight.
Mutlu wasn't crazy about the idea, but the pilot soon set him straight. According to the lawsuit, the pilot said that "he was the pilot, that this was his plane, under his command that (Mutlu) should be grateful for being on board." So the bathroom it was. Eventually, Mutlu was allowed to return to his original seat.
Whatever really happened, JetBlue can't afford any more bad press. The airline is still trying to make customers forget about trapping passengers on their planes for up to nine hours during bad weather last year.
On the other hand, maybe this isn't such bad news. It might just show that JetBlue pilots have a wicked sense of humor. Given the crowds expected on planes and runways this coming summer, that could be a good thing. JetBlue could even build an ad campaign around it: JetBlue - there's always an extra seat!
After hitting a one-year high of $11.99 in July, the stock hit a one-year low of $4.30 in January. JBLU opened this morning at $5.10. So far today the stock has hit a low of $4.50 and a high of $5.11. As of 12:40, JBLU is trading at $4.57, down $0.36 (-7.3%). The chart for JBLUlooks neutral and deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a December covered call at the $5 level. A covered call is an options position that combines the purchase of stock with the 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 34.4% return in eight months if JBLU is above $5 at December expiration. JetBlue would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.
Analysts surveyed by Thomson Financial expect Southwest Airlines Co. (NYSE: LUV) and Pfizer Inc. (NYSE: PFE) to post smaller profits in the first quarter. Both companies are scheduled to report results on Wednesday.
Southwest is expected to essentially break even as far as earnings are concerned, which is down from the same period in 2007 when it earned four cents per share. The company has beat quarterly estimates recently. It only just beat the consensus third-quarter 2007 estimate, but beat the fourth-quarter estimate by 21.2%.
Dallas-based Southwest's low-cost, no-frills approach has made it one of the leading U.S. airlines. In the past year, the company's revenues were $9.8 billion and its net income totaled $645 million. Its EPS growth forecast for the year is -28.7%, worse than the industry average but better than that of rival JetBlue Airways (NASDAQ: JBLU). The consensus recommendation of analysts remains to buy Southwest.
The stock has fallen 18.5% in the past year and trades at a P/E of 14.7. Shares closed Tuesday at $12.35.
Those were the two airlines that came out on top of a national survey of airline quality released today that underscored the sorry state of the industry. Anyone who has flown since 9-11 knows that getting your teeth pulled is more fun. Planes are filled to the brim and are often late. Luggage often goes on magical mystery tours that bypass your destination.
Last year was more of the same, according the Associated Press "There were more lost bags, more bumped passengers, more consumer complaints and fewer on-time flights than in the previous year," the story says. "The rate of consumer complaints was up 60 percent. US Airways (NYSE: LCC) had the most complaints last year. Southwest (NYSE: LUV) had the fewest."
Bad airlines are bad for the environment because it encourages more casual fliers to drive to their destinations. Even with soaring gas prices, flying isn't worth the trouble. I may have to fly this summer and I'm already dreading it. --Freelance writer Jonathan Berr edits the blog Ketchup and Eggs.
I have had some clients ask me, what industry I think will benefit from the $600 rebate checks that are due to be sent out as part of the U.S. economic stimulus package. I think airlines will benefit, especially lower cost carriers like Southwest (NYSE: LUV) and Jet Blue (NASDAQ: JBLU).
The USA Today has an article about the kind of vacation you can have for $600. The article says: "With most Americans expecting to receive a tax rebate of up to $600 ($1,200 for married couples), there are plenty of ways to get the most vacation for your buck, say travel experts. Whether it's a cruise, a tropical paradise, or family travel, these trips can all be done for under $600 a person."
Because we aren't talking about flying around the world or across the Atlantic for that measure, trips to Las Vegas or Orlando, for example, will fit the family, and of course people need a way to get to these destinations, so that's how the airlines become interesting. Throw into the mix potentially stable or even lower fuel costs, and for investors looking for a way to play the "Rebate check" game, you may want to take a look at the airlines.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/2/08
JetBlue Airways Corporation (NASDAQ: JBLU) shares are rising today even after analysts at UBS and Lehman Brothers have reduced earnings estimates and downgraded some of JBLU's competitors this morning, including UAL Corp. (NASDAQ: UAUA) and US Airways (NYSE: LCC), on record fuel costs and recession worries. JBLU shares are moving higher as oil prices have fallen below $100 a barrel on data suggesting lower demand for fuel in a weakening U.S. economy. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JBLU.
After hitting a one-year high of $12.32 last March, the stock hit a one-year low of $4.30 in January. JBLU opened this morning at $5.23. So far today the stock has hit a low of $5.00 and a high of $5.47. As of 12:15, JBLU is trading at $5.46, up 46 cents (9.2%). The chart for JBLU looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a September covered call at the $5 level. A covered call is a combination option and stock position that combines the purchase of stock with the sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 22.4% return in just six months if JBLU is above $5 at expiration in September. JetBlue would have to fall by more than 24% before we would start to lose money on this trade.
JBLU hasn't been below $4, which would be the break-even point, at all in the past year and has shown support around $4.50 recently. This trade could be risky if the price of fuel, but even if that happens, this position could be protected by the support the stock might find just below $5, where the stock has bounced twice in the past few months.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in JBLU.
Sometimes in a period of uncertainty, a look back can provide some perspective. So here are a few highlights from BloggingStocks on March 16, 2007,a year ago today.
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Analyst upgrades:
The weak market conditions have caused many stock prices to fall under $10. Not only smaller -- and perhaps lesser known -- stocks trade under $10 these days, but also some big and famous names such as 
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Stock futures were higher early Wednesday morning as oil and other commodities declined, providing some relief.
Well, at least the seat was free. 
Here are some highlights from this past week's 
Analysts surveyed by Thomson Financial expect 
Anyone planning a vacation this summer should remember two words: 
Yogi is right: Ninety percent of this (economics) game is half-mental
Is the market always right?
Comfort Zone Investing: How this all might play out
