Analyst Upgrades

• Applied Materials (AMAT) to overweight from neutral at Piper Jaffray.
• Air Products (APD) to buy from hold at Citigroup.
• Youku.com (YOKU) and Pinnacle West (PNW) to buy from neutral at Goldman.
• Stryker (SYK) and Zimmer (ZMH) to buy from neutral at UBS.
• Zions Bancorp (ZION) to outperform from neutral at Macquarie.
• Alnylam (ALNY) to buy from hold at Needham.
• AK Steel (AKS) to buy from hold at KeyBanc.

Analyst Upgrades

• Sterne Agee upgraded Wynn Resorts (WYNN) to buy from neutral and has a $115 price target on the stock. The firm believes Encore Macau will drive further share gains near-term.
• Deutsche Bank upgraded PPL Corp. (PPL) to buy from hold and said the equity offering and the the stipulation reached in the KY utilities' rate cases removes important overhangs. The firm has a $30 price target on the stock.
• UBS upgraded CarMax (KMX) to buy from neutral based on forecasts for higher consumer forecast income and positive used car trends. The firm has a $28 target on the stock.
• Aeropostale (ARO) was upgraded to outperform from underperform at Oppenheimer.
• Cardinal Financial (CFNL) was upgraded to neutral from underperform at Baird.
• Pinnacle West (PNW) was upgraded to overweight from equal weight at Barclays.

"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

• Needham upgraded Dick's Sporting Goods (DKS) to buy from hold following the company's Q1 results as it believes the sell-off in shares provides an attractive entry point into the name. The firm has a $31 price target for the stock. Piper Jaffrey upgraded Dick's Sporting to overweight from neutral following the company's Q1 results and raised its target for shares to $34 from $31.
• Piper Jaffray also upgraded MGIC Investment (MTG) to overweight from neutral. The firm upgraded shares on valuation and raised its target to $11 from $10.
• Macy's (M) was upgraded to buy from neutral and VeriSign (VRSN) was upgraded to sell from conviction sell at Goldman.
• Fidelity National (FIS) was upgraded to outperform from market perform at Raymond James.
• Watson Pharma (WPI) was upgraded to overweight from neutral at JPMorgan.

Analyst upgrades:

• Deutsche Bank upgraded ConocoPhillips (NYSE: COP) to Buy from Hold on expectations that oil supply will begin to tighten and demand rise. The firm has a $55 price target on the stock.
• Citigroup upgraded Pinnacle West (NYSE: PNW) to Buy from Hold and added the stock to its Top Picks Live list. The firm expects the company's settlement in Arizona to be approved and raised its target on shares to $35 from $32.
• RBC Capital upgraded NetApp (NASDAQ: NTAP) to Outperform from Sector Perform as it believes that the company is performing better than expected during its October quarter. The firm expects the company to continue to execute well during subsequent quarters and it raised its target to $33.
• Wells Fargo (NYSE: WFC) was upgraded to Buy from Neutral at Goldman.
• PetSmart (NASDAQ: PETM) was upgraded to Buy from Neutral at Janney Montgomery.
• General Dynamics (NYSE: GD) was upgraded to Overweight from Equal Weight at Morgan Stanley.

Analyst upgrades:

• Morgan Stanley upgraded shares of Apple (NASDAQ: AAPL) to Overweight from Equal Weight on expectations of continued iPhone growth. The firm raised its target on the stock to $180 from $105.
• FBR Capital upgraded Bank of America (NYSE: BAC) to Market Perform from Underperform as it sees limited downside with half of the company's capital plan completed. The firm keeps a $12 target on the stock.
• Jefferies upgraded Cash America (NYSE: CSH) to Buy from Hold to reflect a strengthened balance sheet following the capital raise and easing regulatory risk. The firm raised its target price to $30 from $22.
• Ericsson (NASDAQ: ERIC) was upgraded to Outperform from Market Perform at Bernstein.
• MB Financial (NASDAQ: MBFI) was raised to Outperform from Neutral at Baird.
• Pinnacle West (NYSE: PNW) was upgraded at Credit Suisse to Outperform from Neutral.

Before you throw up your hands in frustration, hear me out. For just one example, take Pinnacle West (NYSE: PNW). This Arizona company has two divisions: real estate development and an electric utility. Not surprisingly, the stock has really sunk since the spring as investors started fleeing with the intensifying real estate woes; back in April PNW was trading just above $50, and in early August it was down around $37.

Most trend followers would sell this stock too -- who wants to be involved with any real estate development company? As I see it, however, the company has been excessively punished for its real estate division, and it's currently undervalued when one considers its electricity division. Arizona is a hot place with a growing population, and there's only going to be increasing demand for electrical power to cool the homes and offices of all these people. The company may not return to its previous profit levels, but I think investors have overreacted, and we could see this gain several dollars back. When you add some modest growth to a 5.3% dividend, you could find yourself with a nice little profit.

Type of stock: An Arizona company dealing in real estate and electricity.

Price target: If you can get this below $40, I think you'll see it get up to around $45 over the next year. That's a ten percent gain right there, plus a dividend to make it nearly a 15% gain. Plus if you hold long enough, real estate has to come back sometime. That could be at least a few years though, so you'll need to be patient.

MOST NOTEWORTHY: AutoZone, Inc (AZO), Blue Nile, Inc (NILE), MetLife, Inc (MET), Analog Devices, Inc (ADI) and Advanced Micro Devices (AMD) topped out today's list of noteworthy downgrades:

• Citigroup cut AutoZone (NYSE: AZO) to Hold from Buy with a $145 target based on valuation.Gabelli also downgraded shares of AutoZone to Hold from Buy.

• Lehman downgraded shares of Blue Nile (NASDAQ: NILE) to Equal Weight from Overweight, citing valuation and competitive concerns from Amazon.com (AMZN), which may look to strengthen their position in the diamond engagement market.

• MetLife (NYSE: MET) was cut to Neutral from Buy on valuation.

• Analog Devices Inc (NYSE: ADI) was cut by Credit Suisse and JP Morgan to Neutral from Outperform, by Sanders Morris to Neutral from Buy and by Merrill Lynch to Sell from Neutral after the company reported weak Q2 results.

• Matrix downgraded Advanced Micro Devices (NYSE: AMD) to Strong Sell from Hold based on the loss of market share to Intel Corp's (INTC) new products...

OTHER DOWNGRADES:

• Lehman cut Xcel Energy Inc (NYSE: XEL) and Pinnacle West Capital Corp (NYSE: PNW) to Underweight from Equal-Weight.

• Bernstein downgraded Chevron Corp (NYSE: CVX) to Market Perform from Outperform.

• Credit Suisse downgraded ValueClick, Inc (NASDAQ: VCLK) to Neutral from Outperform.

• Bear Stearns cut CNOOC Ltd (NYSE: CEO) to Peer Perform from Outperform.

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