Credit Suisse upgraded shares of Novartis (NYSE: NVS) to Neutral from Underperform as they believe the stock's defensive characteristics justify a premium valuation.
Merrill raised Dreamworks (NYSE: DWA) to Buy from Neutral and has increased confidence in DWA's sustainable success following the performance of Kung Fu Panda and new revenue streams.
Anadarko Petroleum (NYSE: APC) was raised to Buy from Hold at Stanford on valuation.
Goldman upgraded Smurfit-Stone (NASDAQ: SSCC) and Canadian National (NYSE: CNI) to Buy from Neutral and added International Paper (NYSE: IP) to the Conviction Buy List.
Northern Trust (NASDAQ: NTRS) was upgraded to Buy from Neutral at Merrill.
Analyst downgrades:
Jefferies downgraded shares of Savvis (NASDAQ: SVVS) to Hold from Buy and lowered the target to $17 from $20 to reflect decreasing visibility from economic headwinds and expectations for increased capex.
Citigroup downgraded Regions Financial (NYSE: RF) to Sell from Hold as they believe fundamentals are not in-line with the current valuation following the recent rally.
Merrill lowered their General Electric (NYSE: GE) estimates below consensus and downgraded shares to Neutral from Buy citing increased fundamental pressures on the company's GE Capital unit. GE's target was cut to $28 from $37.50.
JP Morgan upgraded O'Reilly (NASDAQ: ORLY) to Overweight from Neutral, citing increased demand and CSK acquisition synergies.
Yamana Gold (NYSE: AUY) was raised to Outperform from Sector Perform by RBC Capital, based on valuation and the firm's expectation that gold will rally.
HSBC upgraded KLA-Tencor (NASDAQ: KLAC) to Overweight from Neutral with a $44 target.
Analyst downgrades:
Bernstein dropped DISH Network (NASDAQ: DISH) to Underperform from Market Perform, citing continued weak operations, declining cash flow, and satellite sector headwinds, among other reasons.
Macy's (NYSE: M) was downgraded to Neutral from Buy by Goldman Sachs based on valuation.
Kohl's (NYSE: KSS) was also dropped to Neutral from Buy by Goldman based on valuation.
UBS downgraded Dr Pepper Snapple (NYSE: DPS) to Neutral from Buy based on valuation.
Analyst initiations:
Salesforce.com (NYSE: CRM) was started with a Buy rating by Kaufman Bros., which believes the core on-demand CRM application market is nowhere close to full penetration.
Caris initiated Eli Lilly (NYSE: LLY) with a Below Average rating, citing the company's Zyprexa and Cymbalta patent expirations.
Leerink Swann assumed coverage of Amgen (NASDAQ: AMGN) with an Outperform, as the firm predicts that the company's denosumab will allow the company to substantially increase its earnings starting in 2010.
Father's Day is a special occasion for many of us, a day to show our daddies how much we love them. We give dad some extra attention that day and usually also a present that could make him happy. Kiplinger.com has an interesting idea -- one that I really like -- for a Father's Day present you may want to consider: Find a good stock that could bring him a lot of money.
Let's look at some of the companies Kiplinger's Anne Kates Smith believes would be good options this year:
O'Reilly Automotive (NASDAQ: ORLY) is an auto parts retailer that is facing weak demand as a result of soaring crude oil prices. However, analysts believe the company's strategy to buy CSK Auto will bring a lot of national success. ORLY is expected to show earnings of $1.76 per share this year and $2.02 next year.
Stanley Works (NYSE: SWK), headquartered in New Britain, Conn., has the advantage of being one of only two companies offering a complete line of hand tools for consumers. The company focuses its performance on both its industrial tool division and a security business. Analysts forecast a profit of $4.18 this year, and $4.63 a share for next year.
MOST NOTEWORTHY: O'Reilly Automotive, Corning and Lincoln National were today's noteworthy downgrades:
William Blair downgraded O'Reilly Automotive (NASDAQ: ORLY) to Market Perform from Outperform following weak Q1 results, citing the potential for further downward EPS revisions.
Thomas Weisel downgraded Corning Inc. (NYSE: GLW) to Market Weight from Overweight citing balanced risk/reward given the backdrop of a maturing LCD penetration and generational upgrade cycle, and the challenging environment.
Wachovia downgraded Lincoln National Corp. (NYSE: LNC) to Market Perform from Outperform as they believe the weak Q1 market weakness will impact profitability.
O'Reilly Automotive Inc. (NASDAQ: ORLY) shares are trading higher today the company said it will acquire CSK Auto Corp. (NYSE: CAO) for $500 million in a cash and stock deal. The combined company will be the third-largest U.S. auto parts retailer. 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 ORLY.
After hitting a one-year high of $38.84 last April, the stock hit a one-year low of $24.08 in January. ORLY opened this morning at $29.45. So far today the stock has hit a low of $29.18 and a high of $30.50. As of 12:20, ORLY is trading at $29.94, up $1.42 (5.0%). The chart for ORLY looks bullish 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 an August bull-put credit spread below the $25 range. A bull-put credit spread is an options position that combines the purchase and sale of put 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 an 8.7% return in just 5 months as long as ORLY is above $25 at August expiration. O'Reilly would have to fall by more than 16% before we would start to lose money. Learn more about this type of trade here.
MOST NOTEWORTHY: Amazon.com (AMZN), Luminent Mortgage (LUM), Whole Foods (WFMI), Tenet Healthcare (THC) and Pediatrix Medical (PDX) were today's noteworthy upgrades:
Bernstein upgraded Amazon.com (NASDAQ: AMZN) to Outperform from Market Perform, citing margins on 3rd party transactions that are close to eBay's (EBAY) and that the overseas merchants initiative will increase 3rd party units to 25% of sales. The move is expected to increase operating margins to 6.2% by 2011, above the previously expected improvement of 4.6% by the same time.
JMP Securities said Luminent Mortgage's (NYSE: LUM) $64.9M emergency financing from Arco Capital may preserve some value for shareholders, and upgraded shares to Market Underperform from Sell.
JP Morgan added Whole Foods (NASDAQ: WFMI) to its Focus List, and expects the Wild Oats (NASDAQ: OATS) acquisition to be a catalyst for shares.
MOST NOTEWORTHY: The auto parts retail sector, Electronics Arts (ERTS), Cinemark Holdings (CNK) and Monster Worldwide (MNST) were today's more noteworthy initiations:
Wachovia initiated coverage on AutoZone (NYSE: AZO), Advance Auto Parts (NYSE: AAP) and O'Reilly Automotive (NASDAQ: ORLY) with Outperform ratings. The firm sees upside for AutoZone from share buybacks, Advance Auto Parts from improved cost control and margins, and O'Reilly Automotive from share gains and fundamental performance.
First Albany started Electronic Arts (NASDAQ: ERTS) with a Buy rating and sees significant upside in the first-half of 2008.
BMO Capital started Cinemark (NYSE: CNK) with an Outperform rating, citing Cinemark's internal growth opportunities as well as its international opportunities in Latin America.
American Tech started Monster Worldwide (NASDAQ: MNST) with a Neutral rating, saying fundamentals and the macro backdrop remain uncertain...
OTHER INITIATIONS:
Bernstein initiated coverage on Google (NASDAQ: GOOG) and eBay (NASDAQ: EBAY) with Outperform ratings and a $635 target and $39 target, respectively, and Amazon.com (NASDAQ: AMZN), InterActive Corp (NASDAQ: IACI) and Yahoo! (NASDAQ: YHOO) with Market Perform ratings and a $65 target, $38 target and $29 target, respectively.