Oppenheimer upgraded shares of Shanda Interactive (NASDAQ: SNDA) to Outperform from Perform following the company's better-than-expected quarter to reflect its growth acceleration in the casual games platform and margin improvements.
SAIC (NYSE: SAI) was upgraded to Outperform from Market Perform following the solid Q2 report and guidance.
Susquehanna upgraded Zumiez (NASDAQ: ZUMZ) to Positive from Neutral citing positive August comps, revised merchandising, easier comps, and solid financial position.
Novellus (NASDAQ: NVLS) was raised to Overweight from Equal Weight at Morgan Stanley.
Analyst downgrades:
Morgan Stanley downgraded the Semiconductor Capital Equipment sector to In-Line from Attractive citing optimistic expectations for Q4 orders following the recent bounce in stocks. The firm downgraded Lam Research (NASDAQ: LRCX) to Underweight from Overweight and KLA-Tencor (NASDAQ: KLAC) KLAC to Equal Weight from Overweight.
MOST NOTEWORTHY: BJ's Wholesale, Affiliated Managers and Yahoo! were today's noteworthy downgrades:
Citigroup downgraded shares of BJ's Wholesale (NYSE: BJ) to Hold from Buy on valuation and views a takeout as less likely given the current credit market conditions.
Wachovia downgraded shares of Affiliated Managers (NYSE: AMG) to Market Perform from Outperform as they believe credit quality concerns and record commodity prices will hinder the company's recovery in equity flows.
Thomas Weisel downgraded Yahoo! (NASDAQ: YHOO) to Underweight from Market Weight based on visibility into fundamentals and another potential reorganization that will likely be met with skepticism.
OTHER DOWNGRADES:
Third Wave (NASDAQ: TWTI) was cut to Neutral from Outperform at Baird.
MOST NOTEWORTHY: Macrovision, SAIC, Inc and Dassault Systemes were today's noteworthy upgrades:
Jefferies upgraded shares of Macrovision (NASDAQ: MVSN) to Buy from Hold on valuation, as they think the stock looks "very cheap" if the Gemstar (NASDAQ: GMST) deal does not get done; if the deal does get done, they think investors will get paid, but admits it may take longer.
JP Morgan upgraded SAIC Inc. (NYSE: SAI) to Overweight from Neutral as they expect the company to beat consensus estimates as margins surprise to the upside given cost reductions and cargo detection sales.
Dassault Systemes (NASDAQ: DASTY) was upgraded to Overweight from Equal Weight at Morgan Stanley as they find the company's recurring business and lack of exposure to troubled markets attractive in the current market.
OTHER UPGRADES:
GSI Commerce (NASDAQ: GSIC) was upgraded to Outperform from Underperform at Bear Stearns.
Lehman upgraded Cigna (NYSE: CI) to Equal Weight from Underweight.
Citigroup upgraded Alpha Bank (OTC: ALBKY) to Buy from Hold.
MOST NOTEWORTHY: UBS AG, Burger King and SAIC, Inc were today's noteworthy upgrades:
Bear Stearns upgraded shares of UBS (NYSE:UBS) to Outperform from Peer Perform after UBS announced a $10B write-down and replenished capital, as they now believe the subprime issue is broadly behind the company and capital ratios are restored.
Goldman raised its rating on Burger King (NYSE:BKC) to Buy from Neutral as they expect it to outperform the broader restaurant segment amid the current consumer weakness.
SAIC, Inc (NYSE:SAI) was upgraded to Buy from Hold at Jefferies following the better-than-expected Q3 results, as they believe the company continues to outperform competitors and that margin expansion should continue.
OTHER UPGRADES:
eBay (NASDAQ:EBAY) was added to Citigroup's CIR Recommend List.
Banc of America upgraded Reliant Energy (NYSE:RRI) to Neutral from Sell.
MasterCard (NYSE:MA) was upgraded to Outperform from Market Perform at Keefe Bruyette.
As is the case in the corporate world, government agencies have "go to" consultants. So far as the U.S. defense community is concerned, there is an outfit in San Diego that is on the list.
SAIC, Inc. (NYSE: SAI) provides scientific, engineering, systems integration and technical services to all branches of the U.S. military, agencies of the Department of Defense, the intelligence community, the U.S. Department of Homeland Security and other U.S. Government civil agencies. The firm also offers technology-driven consulting services to the oil & gas, utility and pharmaceutical industries. SAIC employs more than 44,000 people, in over 150 cities worldwide. Lockheed Martin (NYSE: LMT) is a major competitor.
The firm pleased investors last week, when it reported Q2 EPS of 24 cents and revenues of $2.2 billion. Street analysts had been looking for 21 cents and $2.17 billion. Management also guided FY08 EPS to 83-88 cents (85 cent consensus) and FY08 revenues to $8.7-$9.0 billion ($8.79B consensus).
MOST NOTEWORTHY: Popular (BPOP), MRU Holdings (UNCL), CDC Corp (CHINA) and Oscient Pharmaceuticals (OSCI) were today's noteworthy initiations:
Kaufman initiated Popular (NASDAQ: BPOP) with a Hold rating and $13 target, citing the company's direct exposure to nearly $2B of Alt A residential mortgage loans originated by its U.S. operations and approximately $250M of exposure to another $4B of collateralized, securitized mortgage pools.
MRU Holdings (NADSAQ: UNCL) was initiated with a Buy rating and $8.50 target at Roth Capital. Roth Capital believes MRU Holdings is on the threshold of potentially explosive growth in the fast growing segment of the education lending market, that of private loans.
JMP Securities said CDC Corp. (NASDAQ: CHINA) , with its resources and connections in China, has excellent deal flow and has been a disciplined, value oriented buyer, and started shares with a Market Outperform and $10.50 target.
Piper believes Oscient Pharmaceuticals (NASDAQ: OSCI) experienced management team and PCP sales force are competitive advantages and will lead to attractive partners. Piper initiated Oscient Pharmaceuticals with an Outperform rating and $5 target...
OTHER INITIATIONS:
Raymond James started SAIC (NYSE: SAI) with a Market Perform rating.
Morgan Keegan initiated Hilltop Holdings (NYSE: HTH) with an Outperform rating.
Dice Holdings (NYSE: DHX) was initiated with an Overweight rating and $15 target at Morgan Stanley.
RBC Capital initiated VMware (NYSE: VMW) with a Sector Perform rating and $75 target.
MOST NOTEWORTHY: Kenexa Corp (KNXA), CACI International (CAI), SI International (SINT), Tyco Electronics (TEL) and YUM! Brands (YUM) were today's noteworthy initiations:
ThinkEquity started Kenexa Corp (NASDAQ: KNXA) with an Accumulate rating, citing the company's attractive business model that can deliver high-value, high-margin content, but questions the company's plans to compete with best-of-breed vendors.
Banc of America initiated CACI International (NYSE: CAI) with a Neutral, citing the challenging budget environment and margin trends.
Banc of America believes shares of SI International (NASDAQ: SINT) offers a compelling risk/reward given the improving civilian funding environment and upside potential from recent M&A activity, and assumed coverage with a Buy rating and $38 target.
Tyco Electronics (NYSE: TEL) was started with a Hold rating at Deutsche Bank, citing risks to the company's potential turnaround.
Yum! Brands (NYSE: YUM) was re-initiated with an Outperform rating at Friedman Billings on valuation and considers any stock price weakness from the increased costs as a buy opportunity.
OTHER INITIATIONS:
Banc of America assumed the following Government IT Services companies with Buy ratings: SRA International (NYSE: SRX) and SI International.
Inferential Focus, Inc. was the subject of Barron's interview this past weekend. This research driven company combs the world looking for new investment trends.
One emerging trend that could prove profitable for investors is the Department of Defense's need for a new generation of military satellites and communications networks in general. Technology exists, and could easily get into the hands of potential enemies, that can jam communications between U.S. spacecraft and ground stations by messing up the current DOD satellites that serve as central communications point for all these devices. A simple ground station based in any country could potentially mess up the communications of our military.
To solve this potential problem, the DOD has embarked on a $34 billion project to build a whole new global networking system similar to the Internet called GIG, or Global Information Grid. The DOD's goal is to make this network the most secure communications network ever to exist.
The companies that are going to benefit from this build-out are Globecomm Systems Inc (NASDAQ: GCOM), SAIC Inc (NYSE: SAI) and Radvision Ltd (NASDAQ: RVSN). My knowledge about these companies is severely lacking. Please send in comments if you know anything about this satellite build-out or these companies.
Just as in the corporate world, government agencies seem to have "go to" consultants. So far as the defense community is concerned, there is an outfit headquartered in San Diego, California that is on the list.
SAIC, Inc. (NYSE: SAI) provides scientific, engineering, systems integration and technical services to all branches of the U.S. military, agencies of the Department of Defense, the intelligence community, the U.S. Department of Homeland Security and other U.S. Government civil agencies. The firm also offers technology-driven consulting services to the oil & gas, utility and pharmaceutical industries. SAIC employs more than 44,000 people, in over 150 cities worldwide. Major competitors include Lockheed Martin (NYSE: LMT) and Computer Sciences Corporation (NYSE: CSC).
The firm pleased investors last week, when it reported Q4 EPS of 20 cents and revenues of $2.15 billion. Street analysts had been looking for 17 cents and $2.07 billion. Management also guided FY08 EPS to 83-88 cents (85 cent consensus) and FY08 revenues to $8.7-9.0 billion ($8.77B consensus).
MOST NOTEWORTHY: CACI International Inc (CAI), SAIC, Inc (SAI), CenturyTel, Inc (CTL), Honda Motor Co (HMC) and Micron Technology, Inc (MU) were today's noteworthy downgrades:
Morgan Stanley downgraded CACI International (NYSE: CAI) and SAIC Inc (NYSE: SAI) to Underweight from Equal Weight to reflect concerns over an increasingly unfavorable political environment as the risk of reduced funding for federal IT initiatives grows.
Soleil downgraded shares of CenturyTel (NYSE: CTL) to Sell from Hold on valuation and a possibly active hurricane season.
Honda Motor Co (NYSE: HMC) was cut to Neutral from Buy at Merrill Lynch.
Micron Technology (NYSE: MU) was downgraded to Sell from Neutral at Goldman Sachs as the firm believes improvements in DRAM pricing will be short lived and that the company will continue to generate losses given its poor cost structure.
OTHER DOWNGRADES:
CSX Corp (NYSE: CSX) was downgraded to Reduce from Neutral at Calyon on valuation and deteriorating volume.
On last night's MAD MONEY on CNBC, Jim Cramer discussed the ramifications of Iran if things get worse. He laid out a "what to do" plan if you wake up one morning and the headlines are horrible. He has a four point strategy for an "Iran Gone Awry" scenario:
First, a drug company, because drug companies don't need a strong economy. Cramer likes Abbott Laboratories (NYSE: ABT), which is even more immune to other drug company problems because it is at its highs. (He doesn't like Pfizer Inc. (NYSE: PFE), Merck & Co. (NYSE: MRK) or Bristol-Myers Squibb (NYSE: BMY)). The 16x P/E and the 14% growth rate make ABT cheap and it sold off two units. He likes its Humira drug as a multi-purpose drug and its stent looks like it may be the best out there.
Second, a company tied to oil, but one that won't get hurt if we get cut off from Middle East oil. Cramer chose Kinder Morgan Energy Partners (NYSE: KMP) but he warns not to buy the wrong Kinder Morgan. This one is a safer high-yield one, he says as it transports via its pipelines and transfers other commodities besides oil and gas.
We've probably all been caught in the airport frisk carrying a forbidden item: fingernail clippers, pocketknife, mouthwash, a brick of C-4 in our tennis shoe -- and we've seen the barrel full of confiscated items. Apparently, when the ban was extended to include liquids such as mouthwash and alcohol, the Transportation Safety Administration was overwhelmed by the volume of goods and forced to a let a contract with Science Applications International Corp. (NYSE:SAI) to dispose of the forbidden items.
SAI took on the five-year, $39 million contract to dispose of confiscated knives, bottles, cigarette lighters, and other items. A total of 13.7 million such items were taken in 2006.
This calls to mind a great money-making idea I had the last time I flew. A not-for-profit organization should set up a booth next to the screening line with a sign that reads, "Did you forget to leave your knife, nail file, or fingernails clippers behind? Don't let them be confiscated! Donate them here for a charitable donation tax deduction."
The organization could then even set up another booth at baggage pickup, with a sign that read "Need a pocket knife, nail file or fingernail clippers? Buy them, used, here and help our cause."
As unpleasant as it may be to consider the business of war, the War on Terrorism has had a significant impact on our economy. The Defense Department today released figures showing which companies are garnering the largest portions of the military spending to support both the war and ongoing operations.
The Pentagon's Top 10 Prime Contact award winners for 2006 are:
Lockheed Martin (NYSE:LMT), $26.6 billion, up from $19.4b in 2005.
The long-awaited IPO of SAIC Inc. has finally made it to market. SAIC priced 75 million shares at $15.00, at the top of the $13.00 to $15.00 range. It will trade on NYSE under the "SAI" ticker.
It has now listed Morgan Stanley and Bear Stearns as the joint book-runners; co-managers are listed as Citigroup, Wachovia, Banc of America, Cowen & Co, Jefferies, and Stifel Nicklaus.
SAIC is one of the leading large private defense contractors with a focus on technology and IT operations. 89% of its revenues come from various departments inside the U.S., and most of that is pertaining to armed forces contracts.
This IPO has literally taken years to come to fruition because of employee voting requirements and because of multiple share classes that had to be consolidated. There was also one last pre-IPO dividend paid out, so the last balance sheet may be a little lighter on the cash at current date.
There is also a financial and backgrounder piece here if you wish to review, but this is a name that defense oriented investment managers almost have to have some exposure to in their investment portfolios.
Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.
Cramer said that Don Rumsfeld has capitulated and essentially allows the Army to buy whatever it wants now. In his search for a new defense stock, Cramer was discussing the upcoming SAIC IPO, which is to debut this week under the "SAI" ticker.
SAIC, Cramer said, is the government-IT and has 89% of its business from our government. It will be the lead systems integrator for the advanced combat systems and also is an IT supplier to NASA.
Cramer then discussed where to buy it. He said SAIC is expected to come public at $13.00 to $15.00, and he thinks that even at $15.00 it is still too cheap compared to other defense contractor multiples. According to Cramer, SAIC is in a league of its own and deserves a 20 P/E like the other defense contractors rather than a 15 P/E. He said investors should be buyers of SAIC up to $20.00 to $22.00.
As for another defense contractor, Cramer said he'd stay away from Armor Holdings Inc. (NYSE: AH) after its warning last week.
Jon Ogg is a partner in 24.7 Wall St, LLC; he does not own securities in the companies he covers.
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We've probably all been caught in the airport frisk carrying a forbidden item: fingernail clippers, pocketknife, mouthwash, a brick of C-4 in our tennis shoe -- and we've seen the barrel full of confiscated items. Apparently, when the ban was extended to include liquids such as mouthwash and alcohol, the Transportation Safety Administration was overwhelmed by the volume of goods and forced to a let a contract with Science Applications International Corp. (NYSE:.jpg)
As unpleasant as it may be to consider the business of war, the War on Terrorism has had a significant impact on our economy. The Defense Department today released figures showing which companies are garnering the largest portions of the military spending to support both the war and ongoing operations.
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