MOST NOTEWORTHY: Symantec, Cardinal Financial and BP Plc were today's noteworthy upgrades:
ThinkPanmure upgraded Symantec (NASDAQ:SYMC) to Buy from Accumulate based on improved execution, stable growth in core business, and ramping competitive position in some high-growth businesses.
Baird upgraded Cardinal Financial (NASDAQ:CFNL) to Outperform from Neutral based on valuation, the company's favorable credit risk profile in Northern Virginia, and its excess capital position.
Societe Generale raised BP Plc (NYSE: BP) to Hold from Sell as it believes the bad news is priced into shares and earnings could be better than expected.
OTHER UPGRADES:
Alcatel-Lucent (NYSE:ALU) was upgraded at Merrill Lynch to Neutral from Underperform.
Jefferies lifted Hunsman (NYSE: HUN) to Hold from Underperform.
MOST NOTEWORTHY: International Rectifier, Wolseley and ProLogis were today's noteworthy downgrades:
Citigroup downgraded shares of International Rectifier (NYSE: IRF) to Sell from Hold after checks in Asia indicated LCD TV display weakness outside Sony/Samsung and signs of slowing China consumer demand.
Morgan Stanley downgraded shares of Wolseley (OTC: WOSLY) to Underweight from Equal Weight to reflect a more negative outlook for the company's Nordic business and U.S. housing starts.
Banc of America cut ProLogis (NYSE: PLD) to Neutral from Buy on long-term growth concerns given the economic slowdown.
EMC (NYSE:EMC) Cut To Market Perform from Outperform at Bernstein, according to24/7 Wall St. The financial website also reports that Netflix (NASDAQ:NFLX) Raised to Overweight at Lehman.
Thomas Weisel initiates Walgreen (NYSE:WAG) as "overweight" according to Briefing.com. Friedman Billings has taken Symantec (NASDAQ:SYMC) off its "best picks" list.
Symantec Corporation (NASDAQ: SYMC) provides software and services that address risks to computer security, information availability, policy compliance and system performance. Its programs protect against viruses, establish firewalls, filter content, detect intrusions, manage remote access and provide virtual private networking. The firm also offers security assessment, consulting and outsourced security management. Symantec has operations in more 40 countries. McAfee (NYSE: MFE) and Microsoft (NASDAQ: MSFT) are major competitors.
The company pleased investors last week, when it reported fiscal Q4 EPS of 36 cents and revenues of $1.55 billion. Analysts had been expecting 34 cents and $1.53 billion. Management also guided Q1 EPS to 34-36 cents (31 cent consensus) and Q1 revenues to $1.555-$1.595 billion ($1.5B consensus).
Back in 1998, Gene Hoffman founded eMusic. No doubt, it was smart timing. However, with the emergence of Napster, Hoffman realized he needed to provide users with a better option. "Our approach was to allow full access to our music library for a fee," said Hoffman, in an interview with me.
It was certainly a smart move. In fact, it became the basis of his next venture: Vindicia, which has announced a venture round of $5.6 million. The investors include Leader Ventures and DCM.
Over the past few years, Vindicia has built a robust platform to allow for on-demand payment management, especially for digital goods. The system helps with credit card breakage, fraud, compliance and various currencies. Some of the customers include Symantec (NASDAQ: SYMC) and Reunion.com.
As seen with the success of companies like Salesforce.com (NYSE: CRM), the subscription business model definitely has a lot of power. Yet, it requires a sophisticated infrastructure, which can be expensive. "Billing is not a core competency," said Hoffman. "It's something that should be outsourced so a company can focus on what it does the best."
MOST NOTEWORTHY: Enterprise Software Sector, NewMarket and Great Plans Energy were today's noteworthy initiations:
Stanford believes Software companies could be better positioned to withstand an economic slowdown than most believe, but feels demand is positioned to slow in 2008. They are "somewhat cautious" on the sector and initiated coverage of Microsoft (NASDAQ:MSFT) and McAfee (NYSE:MFE) with Buy ratings and Symantec (NASDAQ:SYMC) with a Hold rating.
Oppenheimer initiated NewMarket (NYSE:NEU) with an Outperform rating and $68 target, as they believes it is an underfollowed specialty chemical company with improving fundamentals and low investor expectations. They think the company's free cash flow could fuel large share buybacks and strategic acquisitions.
Great Plains Energy (NYSE:GXP) was started with an Outperform rating at Wachovia, as they are positive on the company's strong rate base growth and valuation.
Symantec Corporation (NASDAQ: SYMC) provides software and services that address risks to computer security, information availability, policy compliance and system performance. Its programs protect against viruses, establish firewalls, filter content, detect intrusions, manage remote access and provide virtual private networking. The firm also offers security assessment, consulting and outsourced security management. Symantec has operations in more 40 countries. McAfee (NYSE: MFE) and Microsoft (NASDAQ: MSFT) are major competitors.
The company pleased investors last week, when it reported fiscal Q3 EPS of 33 cents and revenues of $1.52 billion. Analysts had been expecting 29 cents and $1.45 billion. Revenues grew fastest in the Europe, Middle East and Africa region, popping 26% year over year. Management also guided Q4 EPS to 33-35 cents (30 cent consensus) and Q4 revenues to $1.51-$1.55 billion ($1.48B consensus). The stock popped into a bullish 'flag' consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with four 'strong buys', seven 'buys', 19 'holds' and one 'underperform'. Recent price targets fall in the $19-$24 range. The SYMC Price to Sales ratio (2.49), Price to Book ratio (1.29), Price to Cash Flow ratio (11.86) and Price to Free Cash Flow ratio (9.92) compare favorably with industry, sector and S&P 500 averages. Institutions own about 93 percent of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $14.54 and $21.32. A stop-loss of $14.25 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
After hitting a one-year high of $21.32 in October, the stock hit a one-year low of $15.15 last week. SYMC opened this morning at $15.16. So far today the stock has hit a low of $15.57 and a high of $16.16. As of 11:00, SYMC is trading at $16.12, up $0.72 (4.7%). The chart for SYMC looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
MOST NOTEWORTHY: Genentech, Digital River and Entercom Comm were today's noteworthy downgrades:
Jefferies downgraded Genentech (NYSE: DNA) to Hold from Buy and lowered their target to $67 from $85 following the panel vote against Avastin approval for first-line metastatic beast cancer. They believe an FDA approvable letter with request for more data is the most likely outcome on the 2/23/08 PDUFA date and lowered their estimates.
Deutsche Bank downgraded Digital River (NASDAQ: DRIV) to Hold from Buy, as they expect shares to remain range-bound in the near-term given expectations or slower growth in 2008 and a lack of diversification away from Symantec (NASDAQ: SYMC).
Entercom Comm (NYSE: ETM) was lowered to Market Perform from Outperform at Wachovia following a revision in the firm's long-term growth rate for radio.
Internet security company Symantec (NASDAQ: SYMC) today announced its purchase of Vontu for $350 million. Vontu's information security products and processes will aid Symantec in carving out a larger position in data security.
Symantec has traditionally focused on the gate-keeping aspect of security, while Vontu has been a leader in safeguarding the data inside the gate. This includes managing the wetware - establishing and maintaining policies to guide the worst security exposure, human beings, in their use of data. Vontu has also aggressively pushed to address rapidly evolving technologies such as iPods, Blackberries and thumb drives as possible avenues of data leakage.
The purchase seems well timed, in light of growing public concern (and legal suits) about data loss. It positions Symantec nicely as a turnkey solution for companies frantic to lock down their operations before they become the next public punching bag for their libertine handling of confidential info. Nothing drives business like a little fear.
The sale is scheduled to be completed by the end of 2007. Symantec expects the purchase to dilute 2008 earnings by $0.02 per share.
Symantec Corporation (NASDAQ: SYMC) shares are trading higher today after the Semiconductor Industry Association announced today that PC sales are up ahead of its forecast so far for 2007, which could translate to a higher demand for SYMC products as well. And this morning, Think Equities upgraded Symantec to Accumulate. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on SYMC.
After hitting a one-year high of $22.19 in October 2006, the stock fell to a one-year low of $16.20 in March. Over the past two months, the stock has been trending generally upward. SYMC opened this morning at $19.59. So far today the stock has hit a low of $19.49 and a high of $19.98. As of 10:35, SYMC is trading at $19.77, up $0.39 (2.0%). The chart for SYMC looks bullish but deteriorating slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $17.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put 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 a 13.6% return in just 4 months as long as SYMC is above $17.50 at January expiration. Symantec would have to fall by more than 11% before we would start to lose money.
MOST NOTEWORTHY: NutriSystem, Under Armour, CME Group, Air France ADS and Kilroy Realty were today's noteworthy upgrades:
NutriSystem (NASDAQ: NTRI) was upgraded to Strong Buy from Buy at Broadpoint on valuation, as they believe all concerns are overdone.
Think Equities upgraded Under Armour (NYSE: UA) to Buy from Accumulate on valuation.
Wachovia upgraded CME Group (NYSE: CME) to Overweight from Market weight, as they expect fed income volumes to benefit from a more active Federal Reserve.
Goldman added Air France (NYSE: AKH) to its Pan-European Conviction Buy List citing valuation following the recent sell-off.
Citigroup upgraded shares of Kilroy Realty (NYSE: KRC) to Buy from Hold on valuation, as they believe concerns are overblown and the company's underleveraged balance sheet can drive growth.
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MOST NOTEWORTHY: Symantec, Cardinal Financial and BP Plc were today's noteworthy upgrades:
Back in 1998, Gene Hoffman founded eMusic. No doubt, it was smart timing. However, with the emergence of Napster, Hoffman realized he needed to provide users with a better option. "Our approach was to allow full access to our music library for a fee," said Hoffman, in an interview with me. 
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had been expecting 29 cents and $1.45 billion. Revenues grew fastest in the Europe, Middle East and Africa region, popping 26% year over year. Management also guided Q4 EPS to 33-35 cents (30 cent consensus) and Q4 revenues to $1.51-$1.55 billion ($1.48B consensus). The stock popped into a bullish 'flag' consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
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