Analyst Upgrades

• Deutsche Bank upgraded Intercontinental Exchange (ICE) to buy from hold on valuation following the recent pullback in shares. The firm raised its target price on shares to $113 from $108.
• UBS upgraded General Dynamics (GD) to buy from neutral based on improved defense risk profile and stabilization in the business jet market. The firm raised its target to $80 from $70.
• FBR Capital upgraded SunTrust (STI) to outperform from market perform on expectations that regional banks will outperform the large money center banks in this environment. The firm raised its price target on shares to $28 from $22.
• SAP AG (SAP) was upgraded to buy from neutral at BofA/Merrill.
• Thomson Reuters (TRI) was raised to buy from hold at Citigroup.
• Rosetta Resources (ROSE) was upgraded at Wells Fargo to outperform from market perform.

Analyst upgrades:

• Piper upgraded Intel (NASDAQ: INTC) to Buy from Neutral to reflect the company's strong competitive position and low valuation. The firm does not expect Intel to miss Q3 estimates.
  
• Goldman upgraded shares of Deutsche Telecom (NYSE: DT) to Buy from Neutral and added the stock to the Conviction Buy List as they believe the dividend is well covered.
  
• Wachovia upgraded Landstar System (NASDAQ: LSTR) to Outperform from Market Perform on valuation and potential near-term catalysts from hurricane-related activities.
• Abercrombie & Fitch (NYSE: ANF) was raised to Outperform from Market Perform at Friedman Billings.
  
• Research in Motion (NASDAQ: RIMM) was upgraded at JMP Securities to Outperform from Market Perform.
  
• Baird lifted Wells Fargo (NYSE: WFC) to Neutral from Underperform.

Analyst downgrades:

• Jefferies downgraded VCA Antech (NASDAQ: WOOF) to Underperform from Buy as they believe reduced consumer spending and rising unemployment levels will hurt the company's hospital and lab volumes in FY09. The company's target was lowered to $25 from $35.
  
• Oppenheimer downgraded shares of Total System (NYSE: TSS) to Perform from Outperform to reflect the challenging macro environment and the customer portfolio risk from bank consolidation.

MOST NOTEWORTHY: Total Systems, Capital Products Partners and Ashford Hospitality were today's noteworthy initiations:

• Stephens initiated Total Systems (NYSE: TSS) with an Overweight rating and $28 target. The firm thinks investor concerns about the negative impact of economic weakness are overdone.
  
• JP Morgan believes Capital Products' (NASDAQ: CPLP) fixed-rate contract coverage and fixed operating costs should provide stable cash distributions to unit holders. The firm assumed coverage with an Overweight rating.
  
• Ashford Hospitality (NYSE: AHT) was initiated at UBS with a Buy rating and $7 target.

OTHER INITIATIONS:

• Bank of Kentucky (OTC: BKYF) was initiated with an Outperform rating and $29 target at Baird.
  
• Morgan Stanley initiated Longs Drug Stores (NYSE: LDG) with an Equal Weight rating.

MOST NOTEWORTHY: Circuit City, Best Buy, COTT Corp and o2 Micro were today's noteworthy initiations:

• Wachovia started shares of Circuit City Stores Inc (NYSE: CC) with a Market Perform rating, citing low visibility into near-term fundamentals and low conviction in EPS.
• The firm also started shares of Best Buy Incorporated (NYSE: BBY) with a Market Perform rating, citing low visibility into holiday sales and product margin trends and valuation.
• Gabelli started COTT Corporation (NYSE: COT) with a Hold rating, as they believe the company's Q3 was disappointing. The firm thinks COTT lacks pricing power, and would look for margin improvement and successful non-carbonated soft drink penetration from the company before recommending the stock
• Thomas Weisel started shares of o2 Micro International Limited (NASDAQ: OIIM) with an Overweight rating and $24 target. The firm believes the company is in good position to compete in the high growth markets of power management, advanced lighting and security and surveillance

OTHER INITIATIONS:

• Goldman started shares of Heartland Payment Systems (NYSE: HPY) with a Buy rating and VeriFone Holdings, Inc (NYSE: PAY) and Total System Services Inc (NYSE: TSS) with Neutral ratings.
• Gasco Energy Inc (AMEX: GSX) was initiated with an Outperform rating at Morgan Keegan.
• Morgan Joseph resumed coverage of Stage Stores Inc (NYSE: SSI) with a Hold rating.

Jim Cramer came onto MAD MONEY tonight saying he thinks that Total Systems Services Inc. (NYSE: TSS) is one that can be taken over next in a sector and $40 would be a fair price based on Alliance Data prices. Synovus Financial Corp. (NYSE: SNV) is the parent and Third Point is now being an activist investor. The earnings growth of 18% is reason enough to own this. Cramer did note that he is concerned that Automatic Data Processing Inc. (NYSE: ADP) might be acquired first.

Before you trust Cramer, there are some other instances to look at: Alliance Data Systems (NYSE: ADS) was just acquired, First Data Corp. (NYSE: FDC) is going private, and even Bisys Group Inc. (NYSE: BSG) got gobbled up. Keep in mind that some of the premiums in this sector have been small. ADS was nearly a 20% stock jump, but BSG was a horrible low-premium buyout. In making any "buyout projections" you really need to make sure that these stocks are ones you want to own on your own. Picking a company for a buyout just "for the speculation of a buyout" is a strategy that can be more than painful regardless of how nutty private equity deals get.

MOST NOTEWORTHY: UnitedHealth Group Inc (UNH), RF Micro Devices Inc (RFMD), UTi Worldwide Inc (UTIW) and Viacom B (VIA, VIA.B) were some of today's more notable downgrades:

• UBS cut UnitedHealth Group Inc (NYSE: UNH) to Neutral from Buy citing moderating fundamentals in commercial performance and large government exposure that will make it difficult for the company to outperform its peer group.

• Jefferies downgraded RF Micro Devices Inc (NASDAQ: RFMD) to Hold from Buy with a $7 target as the firm believes the company's June guidance signals a slow down of second-half fundamentals.

• Stephens cut UTi Worldwide Inc (NASDAQ: UTIW) to Equal Weight from Overweight based on ongoing cost issues.

• Viacom (NYSE: VIA, VIA.B) was downgraded to Sell from Hold at Sanders Morris to reflect weak ad growth at MTV, digital revenues that the firm believes are a displacement rather than accretive to the revenue base and the lawsuit against Google's (GOOG) YouTube, which the firm feels is the wrong call.

OTHER DOWNGRADES:

• Matrix USA cut Total Systems Services (NYSE: TSS) to Sell from Hold and NIC Inc (NASDAQ: EGOV) to Hold from Buy on valuation.

• Sealed Air Corp (NYSE: SEE) was taken down to Market Perform from Outperform at Wachovia citing valuation.

• HSBC downgraded shares of British Sky Broadcasting Group plc (NYSE: BSY) to Underweight from Neutral.

• Friedman Billings downgraded shares of Maguire Properties, Inc (NYSE: MPG) to Market Perform from Outperform citing the fallout from subprime-exposed office space.

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

Total System Services Inc. (NYSE:TSS) provides electronic payment processing in North America, Europe and the Asia Pacific region. Related offerings include credit authorization, account management, call-center operations and fraud monitoring. Total System Services is more than 80-percent owned by Synovus Financial Corp. (NYSE:SNV) and accounts for about one-third of that firm's total revenue.

The company had good news for investors last week, when it reported Q4 EPS of 44 cents and revenues of $503.9 million. Analysts had been expecting 24 cents and $434.8 million. Management also guided FY07 revenues to $1.69-$1.73 billion ($1.71B consensus) and said it expects 2007 net income to rise by 14-17% (8-10% prior guidance). Shares popped on the news and are now consolidating the gain in a bullish "flag" pattern. Equities frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the stock with one "buy", thirteen "holds" and one "sell." The TSS P/E ratio (23.42), PEG ratio (1.80), Price to Sales ratio (3.26), Price to Cash Flow ratio (13.54), Price to Free Cash Flow ratio (20.67), EPS Growth rate (76.00%), Operating Margin (19.98%), Net Profit Margin (13.75%), Return on Assets (16.08%), Return on Investment (19.88%) and Return on Equity (22.35%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about eight percent of the outstanding shares. Over the past fifty-two weeks, TSS has traded between $17.87 and $30.75. A stop-loss of $25.60 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.