MOST NOTEWORTHY: OptionXpress, China Precision Steel and WMS Industries were today's noteworthy initiations:

• JMP Securities expects OptionXpress (NASDAQ: OXPS) to continue to benefit from continued retail adoption of options and futures trading and expansion of its platform outside the U.S. Shares were assumed with an Outperform rating and $29 target.
  
• Merriman believes China Precision Steel (NASDAQ: CPSL) should be able to gain market share as it mainly competes against foreign imports and currently has a lower cost to manufacture. The firm started shares with a Buy rating.
  
• Soleil expects WMS Industries (NYSE: WMS) to do well as it benefits from market share gains and continues to boost operating efficiencies. The firm initiated shares with a Buy rating and $34 target.

OTHER INITIATIONS:

• Motorola (NYSE: MOT) was initiated at Societe Generale with a Sell rating.
  
• Pacific Growth initiated Cisco Systems (NASDAQ: CSCO) with a Neutral rating.
  
• Sonus Networks (NASDAQ: SONS) was started at JP Morgan with a Neutral rating.

MOST NOTEWORTHY: Lincoln Educational, Sonus Networks and Novartis were today's noteworthy upgrades:

• Lehman upgraded Lincoln Educational (NASDAQ: LINC) to Overweight from Equal Weight based on improving student enrollment growth and valuation.
  
• Merriman upgraded Sonus Networks (NASDAQ: SONS) to Buy from Neutral on the company's strong AT&T (NYSE: T) outlook and near-term upside potential from Japan. They believe shares can trade towards the $5-$6 range.
  
• Bernstein raised Novartis (NYSE: NVS) to Outperform from Market Perform as they believe the company's diversification position it well to withstand future generic expiries.

OTHER UPGRADES:

• Goldman Sachs added Burger King (NYSE: BKC) to its Conviction Buy List.
  
• Credit Suisse upgraded Imperial Tobacco (NYSE: ITY) to Outperform from Neutral.
  
• FreightCar America (NASDAQ: RAIL) was upgraded at Jefferies to Buy from Hold.

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: Sonus Networks, Kenexa, Canadian Pacific, Applied Materials and Powerwave Tech were today's noteworthy upgrades:

• Merriman upgraded Sonus Networks (NASDAQ: SONS) to Neutral from Sell following its win at BT Group (NYSE: BT) for its ASX platform, which the firm believes endorses the company's technology.
  
• Cantor upgraded Kenexa (NASDAQ: KNXA) to Buy from Hold. The firm finds the stock being 40%+ off due to the 3Q weak earnings report as quite an overreaction and believes there is more than enough upside to advise buying shares. Management announced a 2M share buyback program.
  
• Shares of Canadian Pacific (NYSE: CP) was upgraded to Sector Outperformer from Sector Performer at CIBC, as they believe the strong Canadian Dollar and the delay in STB approval of the DM&E acquisition is priced into shares.
  
• Applied Materials (NASDAQ: AMAT) was upgraded to Outperform from Neutral at JP Morgan and to Buy from Hold at Citigroup; Citigroup expects capex revisions to start to reverse in mid-08 and views solar as a free option.
  
• Piper Jaffray raised its rating on Powerwave Technologies (NASDAQ: PWAV) to Outperform from Market Perform on valuation and seasonally strong Q4 capex trends.

OTHER UPGRADES:

• eBay (NASDAQ: EBAY) was upgraded to Outperform from Market Perform at Piper Jaffray.
  
• Morgan Joseph upgraded Perini (NYSE: PCR) to Buy from Hold and Shuffle Master (SHFL) to Hold from Sell.
  
• Goldman upgraded China Petroleum & Chemical Corp (NYSE: SNP) to Buy from Neutral.

MOST NOTEWORTHY: EMC Corp, Blue Nile, Getty Images and Sonus Networks were today's noteworthy initiations:

• EMC Corporation (NYSE: EMC) was initiated with a Buy rating and $24 target at Banc of America as they believe the company's core business is undervalued and should benefit from penetration of new market segments. Deutsche Bank views shares of the stock as fully valued at current levels, starting shares off with a Hold rating and $20 target. Jefferies believes the divergence in valuation of core EMC and majority-held VMWare Inc (NYSE: VMW) creates an attractive entry point. The firm started EMC shares with a Buy rating and $25 target.
  
• CIBC finds shares of Blue Nile (NASDAQ: NILE) fairly valued and sees challenges as competition increases. The firm started shares with a Sector Performer rating.
  
• CIBC also initiated shares of Getty Images Inc (NYSE: GYI) with a Sector Performer rating, as the firm believes the company's earnings visibility is limited while the business model is in transition.
  
• Coverage of Sonus Networks Inc (NASDAQ: SONS) was resumed with an Overweight rating and $8 target at Thomas Weisel. Their checks indicate the company is experiencing increased order activity in 2H07, and they expect an improved Q3 followed by a very strong Q4.

OTHER DOWNGRADES:

• Credit Suisse Group (NYSE: CS) was initiated with an Overweight rating at Morgan Stanley.
  
• Oppenheimer initiated Consolidated Communications Holdings Inc (NASDAQ: CNSL) with a Buy rating and $24 target.
  
• UBS initiated the U.S. homebuilding sector with a Pessimistic outlook.
  
• UBS initiated shares of Nvidia Corporation (NASDAQ: NVDA) with a Neutral rating and $37 target.
  
• Bear started shares of The Dow Chemical Company (NYSE: DOW) with a Peer Perform rating.
  

MOST NOTEWORTHY: Radian Group (RDN), Heelys (HLYS), Sonus Networks (SONS), Leap Wireless (LEAP) and MetroPCS (PCS) were today's noteworthy downgrades:

• Radian Group (NYSE: RDN) was downgraded to Hold from Buy with a $23 target at Citigroup on concerns over the company's potential merger with MGIC Investment (MTG).

• Heelys (NASDAQ: HLYS) was downgraded to Neutral from Outperform at Baird, to Hold from Buy at Brean Murray, to Neutral from Overweight at JP Morgan, to Sector Performer from Outperformer at CIBC and to Market Perform from Outperform at Wachovia following the company's FY07 guidance which was well below the consensus.

• Sonus Networks (NASDAQ: SONS) was downgraded to Sell from Neutral at Merriman, as the firm believes there are a number of concerns that are not reflected in shares, including a flat N-T revenue outlook, a cut in 700bp in gross margins and a sharp uptick in receivable days, among other things.

• LeapWireless (NASDAQ: LEAP) and MetroPCS were both downgraded to Hold from Buy at Citigroup, as they believe the break in subscriber momentum will last for 6-9 months. Wachovia downgraded Leap Wireless to Market Perform from Outperform citing mixed Q2 results and weak Q3 guidance.

OTHER DOWNGRADES:

• UBS removed Coca-Cola (NYSE: KO) and Coach (NYSE: COH) from its Strategic Stock Selection List.

• Jones Apparel (NYSE: JNY) was downgraded to Sell from Neutral at Merrill Lynch.

• CBRE Realty (NYSE: CBF) and Dick's Sporting Goods (NYSE: DKS) were downgraded to Hold from Buy at Citigroup.

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