MOST NOTEWORTHY: Goldman Sachs, Alexza Pharma and SAP AG were today's noteworthy upgrades:

• Wachovia upgraded Goldman Sachs (NYSE: GS) to Outperform from Market Perform, as they believe Goldman has a superior capital position relative to competitors and will likely benefit more than any firm from Bear Stearns' (NYSE: BSC) collapse. They have a $180-$185 target range for the stock.
  
• Following Alexza Pharma's (NASDAQ: ALXA) Q4 report, JMP Securities said they have reduced concerns regarding Loxapine timelines and risks. The firm raised Alexza to Outperform from Market Perform.
  
• SAP AG (NYSE: SAP) was upgraded to Outperform from Market Perform at Bernstein on valuation and a positive view on fundamentals.

OTHER UPGRADES:

• Tyson Foods (NYSE: TSN) was raised to Overweight from Equal Weight at Stephens.
• Citigroup upgraded Teekay Shipping (NYSE: TK) and General Maritime (GMR) to Buy from Hold.
  
• RiskMetrics (NYSE: RMG) was upgraded to Buy from Neutral at Banc of America.

About a month ago I wrote a post about DryShips (NASDAQ: DRYS), the drybulk shipping company that's been on fire during the last year. I argued that the stock was undervalued compared to its peer Teekay Shipping (NYSE: TK) and that the stock remained a buy at those levels. Since this post, the stock has had its up and downs but has managed to outperform both Teekay and the S&P 500.

After the bell Wednesday DryShips reported very strong earnings. For the quarter, excluding a one-time sale, the company earned $1.59 per share vs. analyst estimates of $1.34 per share. DryShips also reported notably strong revenues of $112.5 million vs. estimates of $98.7 million.

The company's CEO and chairman also said that "the outlook for 2008 remains positive with fewer vessels being delivered from the shipyards and Chinese demand projected to remain strong." This seems to confirm my original opinions of continued pricing power for the drybulk industry.

If DryShips can continue its beat-and-raise pattern I believe the stock will trade towards $75 per share in the next 2-3 quarters. However, the company's leverage is a double-edged sword and when times turn bad this stock stands to crash which is why it's imperative to keep a stop loss in place as I advocated in my first post.

The stock finished the day up nearly $2 per share then added $3.75 in gains in after hours trading. When times are good times, times are great for these momentum stocks.

MOST NOTEWORTHY: Chipotle Mexican Grill, Inc (CMG), Caterpillar Inc (CAT), The9 Ltd (NCTY), Teekay Shipping Corp (TK) and Ship Finance International Ltd (SFL) were on today's noteworthy downgrade list:

• Morgan Joseph cut Chipotle Mexican Grill (NYSE: CMG) to Hold from Buy on valuation.

• Stifel downgraded Caterpillar (NYSE: CAT) to Hold from Buy on valuation.

• Pacific Crest cut shares of The9 (NASDAQ: NCTY) to Sector Perform from Outperform with a $41 target following the disappointing Q1 results and slow start to the second quarter.

• Banc of America downgraded shares of Teekay Shipping (NYSE: TK) and Ship Finance Int'l (NYSE: SFL) to Neutral from Buy on valuation and a lack of near-term catalysts...

OTHER DOWNGRADES:

• Matrix USA cut Valhi, Inc (NYSE: VHI) to Sell from Hold.

• UBS downgraded Franklin Resources (NYSE: BEN) to Neutral from Buy.

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

MOST NOTEWORTHY: Bebe Stores Inc (BEBE) topped today's most notable initiations.

• Wedbush started Bebe Stores Inc (NASDAQ: BEBE) with a Hold rating and $21 target; they believe shares are range-bound given near-term fashion risks and limited visibility into square-footage growth.

OTHER INITIATIONS:

• Gymboree Corp (NASDAQ: GYMB) was initiated with a Buy rating and $48 target at Wedbush, as the firm expects margin expansion opportunities from recent sourcing initiatives.

• Roth Capital added A.D.A.M. Inc (NASDAQ: ADAM) with a Buy rating and $8 target.

• Friedman Billings started MBIA Inc (NYSE: MBI) with a Market Perform rating.

• Lazard initiated Teekay Shipping Corp (NYSE: TK) with a Hold rating, citing valuation.

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