MOST NOTEWORTHY: SuccessFactors, Taleo and Penn National were today's noteworthy initiations:

• Oppenheimer initiated SuccessFactors Inc (NASDAQ: SFSF) with an Outperform rating and $15 target. The firm believes the company's double-digit revenue growth will continue as its differentiated HCM solutions gain broad-based adoption. Deutsche Bank believes the company has a strong opportunity to build a highly profitable business as it broadens its footprint, and started shares with a Buy rating and $15 target.
• Deutsche Bank also reinstated coverage of Taleo Corporation (NASDAQ: TLEO) with a Buy rating and $35 target. The firm believes the Vurv acquisition will create significant accretion in 2009 and that investors should take advantage of the recent share weakness.
• Oppenheimer assumed coverage of Penn National Gaming Inc (NASDAQ: PENN) with an Outperform rating and believes the termination of Penn's acquisition by Fortress Investment and Centerbridge will be catalysts for the stock, as they think it provides the company with financial flexibility. In addition, the firm believes Penn's management team has historically made prudent capital decisions.

OTHER INITIATIONS:

• Petrobras Brasileiro SA (NYSE: PBR) was initiated with a Buy rating and $92 target at Goldman.
• Cowen resumed coverage of LeMaitre Vascular Inc (NASDAQ: LMAT) with an Outperform rating.
• Sanofi-Aventis SA (NYSE: SNY) was started at ING with a Hold rating.

Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. Here he discusses some players in the tech sector. For more original thought, visit www.minyanville.com.

SuccessFactors (NASDAQ: SFSF): The stock prices secondary at $11.80 and is holding pretty tough. I'm watching this one pretty closely and was hoping for some post-secondary weakness to possibly add a starter here. A pretty good balance sheet just got better, but I guess the question is, "What is it going to do with that cash?"

Digital TV Holding (NYSE: STV): This company may have made a bottom recently and the deal announced today is exactly what the company talked about in its last quarterly call. I've commented on the possibility of it securing more revenue streams (partnering for recurring advertising revenue) in the past. It looks to be developing the conduits to deliver on that.

comScore (NASDAQ: SCOR): Google (NASDAQ: GOOG) news is hurting the stock badly. I sold my mine some time back after that series of paid click reports ahead of Google's last quarter that proved to be quite inaccurate. All that aside, I don't think comScore's core business is going to disappear within a compressed time frame and may be worth a long side trade if it moves near or under $20. I'll leave it be and see what develops, as the knife could cut further.

Gordon Ritter, the founder and general partner of Emergence Capital Partners, is one of the top venture capitalists in the on-demand space. Besides being the original VC in Salesforce.com (NYSE: CRM), his firm has also funded companies like SuccessFactors (Nasdaq: SFSF), HireRight (Nasdaq: HIRE) and Lithium Technologies.

Well, last week I had a chance to meet with Gordon and we talked about what grabs his interest when an entrepreneur makes a pitch.

Of course, he wants a company that has a big market opportunity (say $1 billion) as well as a qualified team (or, at least, there is a team identified).

True, these are typical things. What else is important?

"What we find that's critical is that a company has shown an ability to build a relationship with customers," said Gordon. "It doesn't have to be a lot of customers. Instead, we want to see evidence that the company is engaging customers."

Unit economics is also key. "What are the customer acquisition costs?" said Gordon. "Is there a low-cost access to leads? We also want to see a short sales cycle."

Something else: Gordon wants a team with strong domain expertise. "On-demand is getting verticalized," he said. "In a way, it's about selling knowledge.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

MOST NOTEWORTHY: Smart Balance, Cascal NV and Ashland were today's noteworthy initiations:

• Citigroup initiated Smart Balance (NASDAQ: SMBL) with a Hold rating and $9 target, as they believe success of the company's new products is not a foregone conclusion and prefers to wait for increased visibility before becoming more positive on the name.
  
• JP Morgan believes Cascal NV (NYSE: HOO) will leverage its global scale and expertise in water infrastructure markets to drive 25% annual EPS growth through 2010. The firm has an Overweight rating on the stock.
  
• Ashland (NYSE: ASH) was started with a Positive rating as Susquehanna, as they are positive on ASH's earnings power. The firm views shares as a compelling risk/reward opportunity.

OTHER INITIATIONS:

• Broadpoint assumed SuccessFactors (NASDAQ: SFSF) with a Strong Buy rating and $12 target.
  
• Morgan Stanley initiated Fastenal (NASDAQ: FAST) with an Equal Weight rating and $40 target.
  
• RBC Capital started Ultra Petroleum (NYSE: UPL) with a Sector Perform rating and $80 target.

MOST NOTEWORTHY: Advanced Analogic, Navios Maritime and Lockheed Martin were today's noteworthy initiations:

• JMP Securities started shares of Advanced Analogic (NASDAQ: AATI) with a Market Outperform rating and $13 target, as they are positive on AATI's increasing margins driven by proprietary portable power management designs and cost-effective manufacturing technology.
  
• Cantor assumed coverage of Navios Maritime (NYSE: NMM) with a Buy rating and $21 target and believes the company's focus on long-term charter contracts and substantially fixed operating costs helps provide clear earnings visibility to support its dividend policy.
  
• American Technology views Lockheed Martin (NYSE: LMT) as a compelling long-term investment opportunity given the overall predictability of the sector and an attractive valuation. The firm initiated shares with a Buy rating and $129 target.

OTHER INITIATIONS:

• Morgan Stanley initiated SuccessFactors (NASDAQ: SFSF) with an Overweight rating.
  
• Cowen initiated Liz Claiborne (NYSE: LIZ) with a Neutral rating and Polo Ralph Lauren (NYSE: RL) with an Outperform rating.

Before tailgating begins today, I like to take the time to run through some equity research. While not as exciting as reading Tim Ferriss' 4-Hour Work Week and some of the radical lifestyle experimentation he writes about on his blog, I stumbled upon a company whose IPO I missed, SuccessFactors (NASDAQ: SFSF).

I've written before about new Software as a Service (SaaS) firms like Salesforce.com (NYSE: CRM) and Concur Technologies (NASDAQ: CNQR) that deliver their software via the internet. Companies employing the software typically rent it and pay as they use it. The software is hosted, which means the software provider manages updates and versions.

I thought it would be worthwhile summarizing some of the research put out this week on the firm by the likes of JPMorgan and Goldman Sachs.

MOST NOTEWORTHY UPGRADES:

• Tortoise Capital (NYSE: TTO) was upgraded to Buy from Neutral at Merrill Lynch.
• Brean Murray upgraded shares of California Water Service (NYSE: CWT) and SJW Corp. (NYSE: SJW) to Buy from Hold on valuation following the recent weakness.

MOST NOTEWORTHY DOWNGRADES:

• Broadpoint downgraded shares of Cache Inc. (NYSE: CACH) to Neutral from Buy and lowered their estimates after the company reduced its Q4 guidance. The broker also removed its $21 target.
• Piper downgraded shares of Salix Pharmaceuticals (NASDAQ: SLXP) to Sell from Neutral to reflect concerns over the company's IBD franchise and potential Xifaxan patent concerns.

MOST NOTEWORTHY INITIATIONS:

• Pacific Crest initiated shares of SuccessFactors (NASDAQ: SFSF) with an Outperform rating and $18 target, and believes the company has better visibility than its On-Demand peers with 2.5 year deals.