Analyst upgrades:

• Thomas Weisel upgraded SanDisk (NASDAQ: SNDK) to Overweight from Market Weight due to accelerating manufacturing cost declines, potential NAND flash sourcing upside at Toshiba (OTC: TOSBF) and Samsung and an increase in 2H09 demand.
  
• Oppenheimer upgraded Quality Systems (NASDAQ: QSII) to Perform from Underperform to reflect potential benefits from the stimulus package and channel checks that indicated IT budgets are stabilizing. The firm raised its target price on shares to $54 from $40.
  
• RBC Capital upgraded OSI Pharmaceuticals (NASDAQ: OSIP) to Outperform from Sector Perform following positive Tarceva survey results and cites valuation.
• Marriott (NYSE: MAR) was upgraded to Outperform from Market Perform at JMP Securities.
  
• Grainger (NYSE: GWW) was upgraded to Buy from Neutral at BofA/Merrill.
  
• Duncan Energy Partners (NASDAQ: DEP) was upgraded to Buy from Neutral at UBS.

Analyst Upgrades

• Citigroup upgraded Deutsche Bank (NYSE: DB) to Hold from Sell citing reduced legacy risks and strength in the fixed income franchise.
• Janney Montgomery upgraded Fuel Systems (NASDAQ: FSYS) to Buy from Neutral based on valuation, the OEM market in Europe for alternative transportation is growing faster than expected, and the $30M equity raise was smaller than expected.
• Freeport McMoRan (NYSE: FCX) was upgraded to Outperform from Market Perform by FBR Capital. The firm believes that the company will benefit from copper supply issues over the long term, and it thinks the stock has reached an attractive entry point.
• Black & Decker (NYSE: BDK) was upgraded to Neutral from Underperform at Credit Suisse.
• American Tower (NYSE: AMT) was raised to Overweight from Neutral at JPMorgan.
• EMC Corp. (NYSE: EMC) was upgraded at Barclays to Overweight from Equal Weight.

Analyst Ugrades

• Stephens upgraded Old Dominion Freight (NASDAQ: ODFL) to Overweight from Equal Weight to reflect the financial problems at YRC Worldwide (NASDAQ: YRCW), which the firm believes could lead to market share gains. Stephens raised its target on Old Dominion Freight to $40 from $22.
• UBS expects SunPower (NASDAQ: SPWRA) to benefit from the U.S. residential solar segment as investment tax credits come available. The firm upgraded shares to Buy from Neutral and raised its target to $38 from $26.
• KeyBanc upgraded DPL (NYSE: DPL) to Buy from Hold based on valuation and potential upside from the Ohio approval of the rate settlement, 2010 guidance, and potential to use cash flow for accretive purposes.
• Microsoft (NASDAQ: MSFT) was upgraded to Conviction Buy from Buy at Goldman.
• Carnival (NYSE: CCL) was raised to Equal Weight from Underweight at Barclays.
• South Financial Group (NASDAQ: TSFG) was upgraded at SunTrust to Buy from Neutral.

Intermune (NASDAQ: ITMN) closed at $13.41. ITMN-191/R7128 combination data in January 2009. ITMN's Pirfenidone (inhibits collagen synthesis) data is expected in Q1 of 2009. Robert Baird has a Neutral rating on ITMN. ITMN January option implied volatility is at 189; April is at 175; above its 26-week average of 136 according to Track Data, suggesting larger price movement.

Onyx Pharma (NASDAQ: ONXX), a developer of cancer therapies, closed at $30.09. ONXX was raised to Overweight verses Neutral at JPMorgan. ONXX January option implied volatility of 76 is above its 26-week average of 69 according to Track Data, suggesting larger price movement.

OSI Pharma (NASDAQ: OSIP), a developer of cancer therapies, closed at $33.16. OSIP January option implied volatility is at 78, July is at 60. OSIP average option implied volatility over the last 26-weeks is 67 according to Track Data, suggesting larger near term risk with less outer month risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Almost everyone these days has encountered cancer in one way or another. While the rate of cancer incidence has stabilized to declined since the early 1990s and, with newer and better treatments as well as early detection, cancer death rates have also declined, the war on cancer is still far from won.

It is no surprise, then, that a few days ago, IMS Health (NYSE: RX) -- a provider of market intelligence to the pharmaceutical and healthcare industries -- said that cancer drugs sales will nearly double by the year 2012. Assuming a compound growth rate of 12-15% a year, sales will grow from $48 billion in 2008 to $80 billion by 2012.

The main contributors to growth, according to the study, are an increasing number of patients on chemotherapy, not just in major markets but in emerging markets, too, as well as longer treatment periods for growing numbers of patients. Also fueling growth are the increased use of targeted therapeutic agents, along with first-time innovations coming to the market. Expensive new biotechnology drugs, and the increasing use of combination therapies that contribute to the exploding cost of treatment will also fuel cancer drugs sales growth.

The overall pharmaceutical market grew at a 6.4% pace in 2007, meaning that with its double-digit growth rate, the cancer drug market -- today contributing 17% to global pharmaceutical sales -- will only represent a greater proportion and emphasis. Of course, there will be factors moderating growth, such as drugs losing exclusivity and financial constraints of payers.

Cancer-fighting drugs can reach the market twice as fast as the average medicine, and companies can charge as much as $50,000 for a single course of treatment. It is no surprise then that with more and more drugs coming off patent many pharma companies are turning their attention to cancer. But can it save them?

The medical war on cancer is being waged along several fronts. A biotech outfit in Melville, New York is one of the more successful combatants.

OSI Pharmaceuticals (NASDAQ: OSIP) is a biotechnology company engaged in the discovery, development, and commercialization of pharmaceutical products. Its Traceva compound has been approved by the FDA for treating lung and pancreatic cancer and is being investigated for other applications. Partner Genentech (NYSE: DNA) co-promotes the drug in the United States. OSI and marketing partner Pfizer (NYSE: PFE) sell Macugen, a treatment for the "wet" form of age-related macular degeneration. Novantrone, an anthracenedione, is offered as an intravenous chemotherapy agent. OSI's developmental pipeline includes additional cancer drugs and treatments for diabetes and obesity.

The firm pleased the Street late last month, when it reported Q3 EPS of 59 cents and revenues of $100.4 million. Analysts had been expecting 40 cents and $86.6 million. Lazard Capital subsequently reiterated its "buy" rating on the shares and analysts from JP Morgan and Lehman Brothers issued positive remarks about the prospects for improved Traceva sales. The stock popped on the news and has since been forming a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with three "strong buys," four "buys" and nine "holds." Analysts see a 17% average annual growth rate through the next five years. The OSIP PEG ratio (1.49), Sales Growth rate (76.76%) and EPS Growth rate (-0.23 to +0.59 y/y) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, the stock has traded between $28.68 and $43.43. A stop-loss of $35.70 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

MOST NOTEWORTHY: Websense (WBSN), OSI Pharma (OSIP), Gap (GPS), Tiffany & Co (TIF) and Callaway Golf (ELY) were today's more noteworthy upgrades:

• Jefferies upgraded Websense (NASDAQ: WBSN) to Hold from Underperform to reflect the strong recent results from SurfControl as well as the possibility for 2H software seasonality.

• Lehman upgraded shares of OSI Pharma (NASDAQ: OSIP) to Overweight from Underweight on valuation as well as expectations for price increases and growth in Europe.

• Susquehanna upgraded shares of Gap (NYSE: GPS) to Positive from Neutral citing management's ability to control costs & manage inventories, share buybacks, and streamlining of organizational structure.
  

• Tiffany & Co (NYSE: TIF) was upgrade to Accumulate from Neutral at Buckingham based on valuation and strong worldwide luxury trends outside of Japan.

• Matrix upgraded shares of Callaway Golf (NYSE: ELY) to Strong Buy from Hold to reflect positive fundamentals and the recent share weakness...

OTHER UPGRADES:

• Valueclick (NASDAQ: VCLK) was upgraded to Buy from Hold at Needham.

• WestLB raised Swisscom (NYSE: SCM) to Add from Hold and Ericsson (NASDAQ: ERIC) to Buy from Hold.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

OSI Pharma (NASDAQ: OSIP) implied volatility of 30 below 26-week average of 38. OSIP develops and commercializes products to improve the quality of life for cancer and diabetes patients. OSIP is recently up .60 to $34.85. Wachovia says "solid earnings growth from unexpected strength of European Tarceva sales and thoughtfully implemented cost controls, we upgrade OSIP to Market Perform from Underperform." OSIP September & October option implied volatility of 30 is below its 26-week average of 38 according to Track Data, suggesting decreasing risks.

Flamel Technologies (NASDAQ: FLML) put volume & volatility Spike on disappointing trial data. FLML, a biopharmaceutical company, is recently down $2.10 to $10.58. Merriman Curhan says "disappointing results for the CASPER trial, a head-to-head study comparing twice daily Coreg IR vs. once-daily Coreg CR, with Coreg CR demonstrating no statistically significant improvement in compliance and/or adverse events relative to Coreg IR." Third Point, an activist hedge fund, announced on 7/16 a 9.2% stake in FLML. FLML September 10 puts have traded 111 times on transaction volume of 2,063 contracts, above its open interest of 137 contracts. FLML September option implied volatility is at 115 above its 26-week average of 57 according to Track Data, suggesting larger risk.

Volatility Index S&P 500 Options-VIX down .21 to 22.68; 10-day moving average is 27.12.

Six trading days in the next eleven days; Options will have no movement during five days.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MOST NOTEWORTHY: Countrywide Financial (CFC), Toll Brothers (TOL), United Parcel Service (UPS) and OSI Pharma (OSIP) were today's noteworthy upgrades:

• Both Friedman Billings and Wachovia upgraded Countrywide Financial (NYSE: CFC) to Market Perform from Underperform following the $2 billion investment by the Bank of America (BAC).

• JMP Securities upgraded Toll Brothers (NYSE: TOL) to Market Perform from Underperform and believes the worst news on housing is reflected and that fears over a disappearing jumbo loan market are overblown.

• Matrix upgraded United Parcel Service (NYSE: UPS) to Buy from Hold to reflect strong demand from overseas shipping.

• Wachovia raised OSI Pharma (NASDAQ: OSIP) to Market Perform from Underperform on valuation...

OTHER UPGRADES:

• UBS raised Joy Global (NASDAQ: JOYG) to Buy from Neutral.

• China Netcom (NYSE: CN) was raised to Neutral from Sell at UBS.

• Roth Capital upgraded IMAX Corp (NASDAQ: IMAX) to Buy from Hold.

• WedBush raised InfoSpace (NASDAQ: INSP) to Buy from Hold.

• Tyson Foods (NYSE: TSN) was upgraded to Hold from Sell.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Websence (WBSN), RF Micro Devices (RFMD), Fiserv (FISV), Qwest (Q), and OSI Pharma (OSIP) were today's noteworthy upgrades:

• JP Morgan upgraded shares of Websence (NASDAQ: WBSN) to Overweight from Underweight ahead of the renewal period starting in the December quarter and expects this momentum to drive shares higher.

• RF Micro Devices (NASDAQ: RFMD) was raised to Buy from Hold at Citigroup, who said the Sirenza Microdevices (SMDI) deal gives the company its first real prospect for gross margin expansion in years.

• Matrix USA upgraded Fiserv (NASDAQ: FISV) to Buy from Sell, and expects the company to benefit from the Checkfree (CKFR) acquisition.

• Lehman upgraded shares of Qwest (NYSE: Q) to Overweight from Equal Weight, citing the hiring of industry veteran Ed Mueller as CEO. The firm believes the new CEO removes an overhang and could lead to a change in strategic direction and significantly increase capital spending.

• JP Morgan upgraded OSI Pharma (NASDAQ: OSIP) to Overweight from Underweight based on valuation and upcoming catalysts for Tarceva that should be seen in the next year...

OTHER UPGRADES:

• UBS upgraded Allstate (NYSE: ALL) to Neutral from Sell.

• ThinkEquity raised Hansen Medical (NASDAQ: HNSN) to Buy from Accumulate.

• Stanford upgraded Leap Wireless (NASDAQ: LEAP) to Buy from Hold.

• FTN Midwest upgraded shares of Lexmark (NYSE: LXK) to Neutral from Sell.

• Hambrecht upgraded NetGear (NASDAQ: NTGR) to Buy from Hold.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Burger King Holdings, Inc (BKC), Supertel Hospitality Inc (SPPR), OSI Pharmaceuticals, Inc (OSIP), Brown-Forman Corp (BF.B) and NGAS Resources, Inc (NGAS) were today's noteworthy initiations:

• CIBC considers shares of Burger King Holdings (NYSE: BKC) to still be attractive and has above-consensus estimates, starting shares with an Sector Outperformer rating. The firm believes increased operating hours and breakfast value meals will drive results, while cost savings should help margins.

• JMP Securities believes there is plenty of room for growth at Supertel Hospitality (NASDAQ: SPPR) via acquisitions, leading to strong FFO upside, initiating shares with an Outperform rating and $8 target.

• ThinkEquity sees additional upside for Tarceva and started OSI Pharmaceuticals (NASDAQ: OSIP) with a Buy rating and $50 target.

• AG Edwards believes Brown-Forman (NYSE: BF.B) is well-positioned to benefit from new trends in spirits and wine, starting shares with a Buy rating and $74 target.

• RBC Capital is positive on NGAS Resources' (NASDAQ: NGAS) growth potential and high quality assets, starting shares with an Outperform rating and $11 target...

OTHER INITIATIONS:

• CIT Group (NYSE: CIT) was started with a Market Perform rating at Keefe Bruyette.

• Oppenheimer started shares of Watsco, Inc (NYSE: WSO) with a Buy rating.

• ThinkEquity started Coley Pharmaceutical Group, Inc (NASDAQ: COLY) with an Accumulate rating and $10 target.

• Goldman initiated shares of Northwest Airlines Corp (OTC: NWACQ) with a Neutral rating and $26 target.

• Duetsche Bank initiated PPL Corp (NYSE: PPL) with a Buy rating and $51 target.

• Citigroup initiated Comverge, Inc (NASDAQ: COMV) with a Hold rating and $26 target.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Take-Two Interactive Software, Inc (TTWO), Sony Corp (SNE), Sun Microsystems, Inc (SUNW), PetSmart, Inc (PETM) and Constellation Energy Group, Inc (CEG) were today's more notable initiations:

• Prudential started Take-Two Interactive Software (NASDAQ: TTWO) with a Neutral rating and $25 target, citing valuation and limited impact from GTA IV for the rating.

• Prudential believes Sony Corp (NYSE: SNE) is well-positioned to benefit from digital media revolution in consumer electronics and that operating margins will continue to improve; Sony was initiated with an Overweight rating and $62 target.

• Cowen views Sun Microsystems' (NASDAQ: SUNW) valuation full and initiated shares with a Neutral rating.

• Pali Capital initiated PetSmart, Inc (NASDAQ: PETM) with a Buy rating and $37 target, room for price optimization as their recent checks suggest that consumers prefer PETM, regardless of price.

• Credit Suisse initiated shares of Constellation Energy Group (NYSE: CEG) with an Outperform rating and $94 target.

OTHER INITIATIONS:

• Stifel initiated several stocks in the network technology sector: Juniper Networks, Inc (NASDAQ: JNPR) was initiated with a Buy rating and $23 target, while Acme Packet, Inc (NASDAQ: APKT), Cisco Systems (NASDAQ: CSCO) and Polycom, Inc (NASDAQ: PLCM) were initiated with Hold ratings.

• First Albany initiated NutriSystem (NASDAQ: NTRI) with a Buy rating and $57 target.

• Piper Jaffray started OSI Pharmaceuticals, Inc (NASDAQ: OSIP) with an Outperform rating and $42 target.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).