Philip Morris (NYSE: PM) was upgraded to Outperform from Neutral at Credit Suisse.
Friedman Billings upgraded shares of Principal Financial (NYSE: PFG) to Market Perform from Underperform as they believe the company's capital buffer could keep outrunning credit losses.
Friedman Billings also upgraded Office Max (NYSE: OMX) to Outperform from Market Perform. The firm believes the risk of recourse to Office Max from the Timber Notes formerly backed by Lehman is low and that any litigation by noteholders will have a low level of success.
Citigroup upgraded CF Industries (NYSE: CF) to Buy from Hold on valuation following the recent weakness but lowered their target to $113 from $128.
Analog Devices (NYSE: ADI) was upgraded to Buy from Neutral at Merrill Lynch.
Wait, there's more! Boeing Co. (NYSE: BA) reported horrid results because of a machinists' union strike. WachoviaCorp. (NYSE: WB) likely last results as a public company were as awful as people expected. Apple Inc.'s (NASDAQ: AAPL) guidance was tepid, though not apparently as awful as some expected since the shares are rising. Let's not forget that the market is down yet again by triple digits, so it's not surprising that some of these stocks are trading down despite their reports.
To recap, smoking and fast-foods are a good thing and making drugs, technology or practically anything else is a bad thing. The best cliche I can come up with is that this market is an order of fries short of a Happy Meal. Its elevator does not go all the way to the top. I just can't think of any more folksy metaphors to explain my frustration. Please respond with any better ones.
All my career, the sentiment indicators have worked. When you get anything near minus 10 on the oscillator, you have to be silly not to buy. When you get anything approximating 35% bulls on the Investors Intelligence survey, you have to buy.
We have almost double that negative on the oscillator and half as many bulls as that pathetic number.
Sentiment has become meaningless. It is incredible.
If we are going into a severe recession, some of the selling makes sense, but not all of it. As we pull back to 8500 on the Dow, we will be looking at stocks that are yielding 6% to 7% that are solid and can't be shaken. We will be finding stocks at prices that we will look back and think it was impossible to believe.
And then there will be another cohort where we will buy and then watch them go down again, because business is so soft.
I want to reiterate that the stock market for now is just plain broken. You can't have Occidental Petroleum (NYSE: OXY) down 15% like it is nothing. The company should be losing money with that kind of decline. Remember when I said on Monday that you can't have ExxonMobil (NYSE:XOM) ) go up 10 because it can go down 10 just as easily?
PM opened this morning at $53.76. So far today the stock has hit a low of $53.66 and a high of $54.46. As of 12:35, PM is trading at $53.96, up 4 cents(0.1%). The chart for PM looks bullish and S&P gives PM a positive 4 STARS (out of 5) buy ranking.
For a bullish hedged play on this stock, I would consider a March covered call at the $60 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 an 8.4% return in 7 months if PM is above $60 at March expiration. But unlike our normal credit spread trades, that is not the goal here. This position turns out strictly better than buying and holding the stock if it is below $61.25 at March expiration, and it makes a reasonable return in the unlikely event that the stock rises to that level. Plus, you can probably expect to catch at least two dividend payments over that time. We get about 2% of downside protection on this pretty stable stock by using a covered call. Learn more about this type of trade here.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in PM.
EMC Corp. (NYSE: EMC) said its first-quarter profit dipped 14% on acquisition-related charges, but it posted a 17% revenue gain to $3.47 billion that beat Wall Street forecasts. Excluding items, EMC's profit was $477.3 million, or 23 cents per share. Also, VMware (NYSE: VMW) reported a 5% profit rise on faster-than-forecast sales growth. The company is mostly held by EMC. EMC shares are up about 5.5% in premarket trading. VMW shares are up 13.75% in premarket trading.
Philip Morris International Inc. (NYSE: PM), spun off last month by Altria Group Inc. (NYSE: MO) reported first-quarter earnings this morning, posting a 29% increase in profit to $1.87 billion, or 89 cents a share as new varieties of Marlboro cigarettes such as clove flavored ones as well as acquisitions spurred sales in Indonesia, Pakistan and Mexico. The weak dollar also helped boost the bottom line. Revenue climbed 18% to $15.6 billion. The results beat the 78 cents analysts were looking for. Altria reports quarterly results Thursday. While Altria now does all its business in the U.S. where smoking has been on the decline, cigarette companies tend to do well in a weak economy.
Last night we heard that eBay Inc. (NASDAQ: EBAY) is suing Craigslist for unfairly trying to dilute eBay's 28% stake in it by more than 10%. Craiglist today is firing back, saying the online auctioneer's actions are unethical and smelling of a hostile takeover.
MOST NOTEWORTHY: Horace Mann, Sonus Networks and Mellanox were today's noteworthy initiations:
Keefe Bruyette views Horace Mann (NYSE: HMN) as fairly valued and expects the competitive personal lines environment and deteriorating loss trends to act as strong headwinds. Shares were assumed with a Market Perform rating and $19 target.
Thomas Weisel initiated Sonus Networks (NASDAQ: SONS) with a Market Weight rating and $3.50 target and believes management's expectation for 20% FY08 revenue growth is too aggressive.
Susquehanna expects Mellanox (NASDAQ: MLNX) to benefit from the growing end markets for InfiniBand technology, and started shares with a Positive rating and $20 target.
OTHER INITIATIONS:
Jefferies initiated McKesson (NYSE: MCK) with a Buy rating and $67 target.
Philip Morris (NYSE: PM) was initiated at JP Morgan with an Overweight rating and $62 target, and added to the firm's Analyst Focus List.
Baird started Pharmasset (NASDAQ: VRUS) with a Neutral rating and $21 target.
MOST NOTEWORTHY: WSP Holdings, Harris and XTO Energy were today's noteworthy initiations:
Oppenheimer believes WSP Holdings (NYSE: WH) is benefiting from rapid growth in the oil and gas exploration market and a move toward deeper and harsher environment drilling. The firm has an Outperform rating and $9.50 target on the stock.
UBS assumed Harris (NYSE: HRS) with a Buy rating and $63 target, as they see upside to the company's FY09 estimates driven by RF Communications. UBS views the recent pullback as a buying opportunity.
Morgan Keegan is positive on XTO Energy's (NYSE: XTO) projected 20% production growth, value building through acquisitions, and valuation; shares were initiated with an Outperform rating.
OTHER INITIATIONS:
Goldman started Philip Morris (NYSE: PM) with a Buy rating and $60 target.
Schering-Plough (NYSE: SGP) was downgraded to "equal-weight" from "overweight" at Lehman Brothers according to247wallst.com. The financial website also reported that Philip Morris International (NYSE: PM) was started as "overweight" at Lehman.
Briefing.comreports that Morgan Stanley upgraded Vodafone (NYSE:VOD) from "overweight" to "underweight".
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Analyst upgrades:
Setting aside any talk of price-to-earnings ratios or cap ex spending for a second and consider the following: 
All my career, the sentiment indicators have worked. When you get anything near minus 10 on the oscillator, you have to be silly not to buy. When you get anything approximating 35% bulls on the Investors Intelligence survey, you have to buy.
Here are some highlights from this past week's 
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Philip Morris
Stock picks and pans for troubled times: RIMM, ED, ISRG, GLW, LEA, SLB, GOOG ...
Is Berkshire Hathaway better than S&P Index?
Closing Bell: Torch Passing on a Friday Rally
