Analyst Upgrades

• Aetna (AET) to buy from neutral at Goldman.
• Kellogg (K) to buy from neutral at UBS.
• PetSmart (PETM) to outperform from market perform at JMP Securities.
• NetApp (NTAP) and Scripps Networks (SNI) to buy from hold at Wunderlich.
• Thoratec (THOR) to buy from hold at Auriga.
• ArcelorMittal (MT) to overweight from neutral at HSBC.
• Bristol-Myers (BMY) to outperform from neutral at Cowen.
• Eaton Vance (EV) to neutral from sell at Ticonderoga.
• Adtran (ADTN) to buy from underperform at BofA/Merrill.

Oil Services Holders Trust (OIH) closed above $155 as crude oil futures traded above $91 according to Bloomberg. February and April put option implied volatility of 30 is near its 26-week average of 30 according to Track Data, suggesting non-directional price movement.

Merck & Co., Inc. (MRK) overall option implied volatility is at 21 according to Track Data, below its 26-week average of 23 into its release of Q4 EPS on February 3, suggesting decreasing price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com

Merck (MRK - option chain) stock is trading lower today after the company said it has ended a clinical study for its cardiovascular drug Vorapaxar in patients with acute coronary syndrome. 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 MRK.

This morning, MRK opened at $35.59. So far today the stock has hit a high of $35.78 and a low of $34.55. As of 12:15, MRK is trading at $34.63, down $2.52 (-6.8%). The chart for MRK looks bullish and S&P gives MRK a positive 4 STARS (out of 5) buy ranking.

I have already gone on record this year saying that financial companies and insurance stocks are going to continue to rebound. In my previous two posts Chasing Value: 2011 Stock Picks -- 5 of 11 and Chasing Value: 2011 Stock Picks -- 6, 7, 8, 9, I included several financial institutions. Today I add an insurance company.

The industry got whacked hard for many reasons. For one, it makes a significant amount of profit by investing its float, and like every other investor, the industry lost a pile of money in the financial crisis. It was embroiled more directly than some industries, as several insurers are affiliated with banks. Finally the housing crisis meant disruption to payment streams by homeowners who were delinquent on more than their mortgages.

Analyst Upgrades

• Research In Motion (RIMM) to buy from hold at Jefferies.
• Citigroup (C) to buy from hold at ISI Group.
• Integrated Silicon (ISSI) to buy from hold at Auriga.
• Kinross Gold (KGC) to outperform from neutral at Credit Suisse.

Merck (MRK - option chain) shares are rising today after the company said a study of its experimental cholesterol drug Anacetrapib showed the drug dramatically lowered bad cholesterol (LDL) while raising so-called good cholesterol (HDL). If you think that the stock 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 MRK.

MRK opened this morning at $34.81. So far today the stock has hit a low of $34.52 and a high of $34.94. As of 12:05, MRK is trading at $34.65 up 0.55 (1.6%). The chart for MRK looks bullish and S&P gives MRK a positive 4 STARS (out of 5) buy ranking.

Analyst Upgrades

• Deutsche Bank upgraded Dr Pepper Snapple (DPS) to buy from hold based on valuation. The firm keeps a $39 target on the stock.
• Piper Jaffray upgraded Kenexa (KNXA) to overweight from neutral, citing a strengthening of trends for the company. The firm has a $29 price target on the stock.
• Janney Montgomery upgraded Gaylord Entertainment (GET) to buy from neutral on expectations the company will benefit from strong trends in 2011. The firm raised its target for shares to $35 from $32.50.
• MeadWestvaco (MWV) was upgraded to outperform from neutral at Credit Suisse.
• EADS (EADSY) was upgraded to overweight from neutral at JPMorgan.

Analyst Upgrades

• Credit Suisse upgraded Netflix (NFLX) to neutral from underperform and raised its price target to $140 from $90. The firm's survey work indicates Netflix's streaming offering is compelling and will continue to grow as it acquires additional streaming content.
• Barclays upgraded Ford (F) to overweight from equal weight, citing the company's earnings power, reduced cost base, expectations for a return to prior peak margins and valuation. The firm raised its target to $16 from $15.
• Merriman upgraded OpenTable (OPEN) to buy from neutral based on increased visibility into international expansion from the toptable.com acquisition and upside from its Spotlight product.
• Siemens (SI) was upgraded to conviction buy from buy at Goldman.
• Medicis (MRX) was upgraded to buy from hold at Jefferies.
• IDEX (IEX) was upgraded to outperform from neutral at Baird.

Here is a common sentiment about the stock market: "No fun at all. As I have said before, I believe it has turned into one big casino largely divorced from its original goal of providing capital to companies who produce something of value."

There's a lot of truth to what "granny" recently said to me in an e-mail. Fortunately she also noted "FYI Granny's up 5.86% + dividends." That would give her a gain of about 10% in the past ten months since I posted Where should granny put $50,000, suggesting a very conservative portfolio for an uncertain time.

Not only has she earned a very nice return, surpassing her CD account by 9.5% (20 fold), but she was able to do so with a great deal less volatility than the overall market most of us have lived through.

I'm looking at Novartis (NVS) late in the trading day. There's less than an hour to go before the market closes. The stock is up 0.4% to $50.97. Is it me, or is Wall Street telling us that it isn't too excited by the drug maker's latest earnings report? Which actually wasn't bad, as far as I can tell. Perhaps the market actually is excited, but the response is being muted by the overall tone of the session (volume is strong, I should mention).

The one-year chart for the equity probably wouldn't make you want to buy this one for a trade. It almost seems as if the chance to get in on a great pullback has come and gone, doesn't it? Well, let's have a peek at the fundamentals.

Thursday morning, Merck & Co. (MRK) announced that it would shut down eight manufacturing plants and eight research sites around the world, along with consolidating some of its offices.

Merck notes that these moves are part of the ongoing consolidation triggered by the acquisition of Schering-Plough last November. The acquisition made Merck the second-biggest pharmaceutical firm in the world. That said, the company is going to eliminate roughly 15% of its workforce (which comes out to 16,000 jobs) in order to save roughly $3.5 billion a year.

Analyst Upgrades

• FBR Capital upgraded Noble Corporation (NE) to outperform from market perform as it finds the company's acquisition of Frontier Drilling as smart and strategic. The firm upped its target price for shares to $42 from $36.
• Citigroup upgraded Ameriprise (AMP) to buy from hold, citing potential margin expansion from the Columbia acquisition. The firm maintains a $50 price target for shares.
• Thomas Weisel upgraded Jabil Circuit (JBL) to overweight from market weight, citing valuation and the company's growth prospects. The firm raised its target for shares to $20 from $18.
• Blackrock (BLK) was upgraded to outperform from market perform at Keefe Bruyette.
• Disney (DIS) and News Corp (NWS) were upgraded to buy from neutral at Goldman.
• Portland General Electric (POR) was upgraded to neutral from underperform at BofA/Merrill.

"If you're a retiree or otherwise focused on income, dig into the holdings that make up our Incredible Dividend Machine; this portfolio is designed to home in on champion dividend payers," says Richard Band.

The editor of Profitable Investing explains, "We're looking for the highest yields available, consistent with safety. Three that currently stand out are Merck (MRK), AT&T (T) and Pinnacle West (PNW).

Analyst Upgrades

• Citigroup upgraded Baker Hughes (BHI) to hold from sell following the company's Q1 results.
• Auriga upgraded Canadian Solar (CSIQ) to buy from hold as it believes the company's negative preannouncement on April 20 removes a downside catalyst. Despite upgrading, the firm lowered its target for shares to $21 from $25.
• Deutsche Bank upgraded Post Properties (PPS) to hold from sell following the company's Q1 results. The firm upped its target for shares to $27 from $16.
• Wright Express (WXS) was upgraded to buy from neutral at Goldman.
• Nvidia (NVDA) coverage was assumed with a buy from hold at ThinkEquity.
• Elan (ELN) was upgraded to neutral from sell at UBS.

This declining company lost patent protection for its statin, Zocor. It has replaced some of these sales with three new drugs, but, in reality, they cannot make up for the lost revenue from Zocor.

Merck's (MRK) revenues are stagnant and the company has a very weak pipeline. Even if health care reform adds more patients, it will also bring increased pressure to cut prices.