Analyst Upgrades

• Bristol-Myers (BMY) to hold from underperform at Jefferies.
• Pep Boys (PBY) to buy from hold at Stifel Nicolaus.
• Tesla Motors (TSLA) to overweight from equal weight at Morgan Stanley.
• Emerson (EMR) to buy from hold at Deutsche Bank.
• ARM Holdings (ARMH) to buy from neutral at BofA/Merrill.
• NetLogic (NETL) and Cavium Networks (CAVM) to buy from hold at Auriga.
• Aimco (AIV) to hold from sell at Citigroup.
• Ceragon Networks (CRNT) to overweight from equal weight at Barclays.

"Our stock selection is based on assessing the investment criteria of various legendary investors, ranging from Ben Graham to Marty Zweig," explains John Reese.

The editor of Validea newsletter continues, "In this case, our latest feature on Western Digital (WDC) is based on the strategy of Peter Lynch. Indeed, the stock scores a 100% rating based on our Lynch model.

"Western Digital Corporation designs, develops, manufactures and sells hard drives. Its hard drives are used in desktop computers, notebook computers, and enterprise applications such as servers, workstations, network attached storage, storage area networks and video surveillance equipment.

Stock markets opened a bit higher this morning, but turned south pretty quickly as rising prices for crude oil neared $107/barrel. Then a downgrade of the semiconductor sector from Wells Fargo analysts pushed indexes lower. WTI crude oil settled slightly above $105/barrel for the day, and gold is trading up $7.70, to $1,435.90/ounce. The dollar weakened against all major currencies as well, with the euro at one point rising above $1.40.

Here are the numbers for late afternoon trading today:

Dow Jones 12,090.03 -79.85 (-0.66%)
S&P 500 1,310.13 -11.02 (-0.83%)
Nasdaq 2,745.63 -39.04 (-1.40%)

When it comes to hard-disk drives, Western Digital (WDC) is the largest publicly traded operator in the U.S. And with its recent deal, it will get much larger. That is, the company has agreed to pay $4.3 billion for the data storage business of Hitachi.

Based on the stock move for Western Digital, investors love the transaction. In early Monday trading, the shares were up a sizzling 17.33% to $35.21.

Analyst Upgrades

• Barclays upgraded Western Digital (WDC) to overweight from equal weight.
• LDK Solar (LDK) was upgraded to buy from hold at Needham.
• Legg Mason (LM) was upgraded to outperform from neutral at Macquarie.
• Agilent (A) was upgraded to buy from hold at Stifel Nicolaus.
• Wells Fargo upgraded Dean Foods (DF) to outperform from market perform and Developers Diversified (DDR) to market perform from underperform.
• Deutsche Bank also upgraded Developers Diversified, to buy from hold.
• Northrop Grumman (NOC) was upgraded to sell from conviction sell at Goldman.
• MYR Group (MYRG) was upgraded to buy from hold at BB&T.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Lockheed Martin Corp. (LMT) lower Q1 earnings were better than expected but it lowered its full-year outlook.
• McDonald's Corp. (MCD) solid Q1 numbers were driven by its value menu, McCafe, and strength overseas.
• Microsoft Corp. (MSFT) topped Q1 earnings expectations and cash from operations rose, but shares declined.
• Netflix Inc. (NFLX) shares were lifted after its strong Q1 earnings beat consensus estimates.
• PepsiCo Inc. (PEP) fell short of Q1 revenue estimates but beat earnings per share expectations by a penny.

Analyst upgrades

• Deutsche Bank upgraded Sonoco Products (SON) to buy from hold after the company reported Q1 results and raised guidance. The firm upped its target for shares to $38 from $32.
• Baird upgraded Western Digital (WDC) to outperform from neutral following the solid Q3 report and guidance. The firm raised its target to $50 from $48.
• Goldman upgraded Qwest (Q) to neutral from sell. Qwest is being acquired by CenturyLink (CTL).
• Hershey (HSY) was upgraded to neutral from underweight at JPMorgan.
• Principal Financial (PFG) was upgraded to neutral from sell at UBS.
• Monster Worldwide (MWW) was upgraded to market perform from underperform at Wells Fargo.

Earnings season is in full swing, and this week will bring quarterly results from Amazon.com (AMZN), DeVry (DV), Freeport McMoRan (FCX), Hershey (HSY), Kimberley-Clark (KMB), Starbucks (SBUX), Union Pacific (UNP) and United Technologies (UTX), all of which, according to analysts surveyed by Thomson Reuters, are expected to post double-digit earnings growth from the same period of last year (when most stocks were at their recessionary lows).

After strong showings last week by Google (GOOG), Intel (INTC) and JPMorgan Chase (JPM), the earnings spotlight again will be on the tech and financial sectors. So, let's take a closer look at what's expected from impending results from Apple (AAPL), International Business Machines (IBM) and Western Digital (WDC), as well as Goldman Sachs (GS), American Express (AXP) and Morgan Stanley (MS).

Seagate Technology (STX) and Western Digital (WDC) have been battling it out in the hard drive sector for decades. While larger conglomerates have sold or dumped their hard drive operations, these two companies control the vast majority of shipped digital storage devices globally. Unfortunately for them, the struggles of the PC industry last year may mean a tough road ahead as PC makers strike back to try and reclaim margins that are still quite thin, even as the U.S. economy rebounds.

MOST NOTEWORTHY:

• Citigroup downgraded shares of Ford (NYSE: F) to Sell from Hold, as they see a number of rising headwinds in the company's turnaround, including a low likelihood of Ford's relatively older product lineup holding U.S. share in the first half of 2008.
• Lehman downgraded DealerTrack (NASDAQ: TRAK) to Equal Weight from Overweight citing near-term headwinds from economic uncertainty, declining auto sales, declining growth, and non-prime transaction risk.
  
• Oppenheimer downgraded shares of Omnicare (NYSE: OCR) to Perform from Outperform to reflect concerns over the timing and pace of a potential recovery.

• Banco Bilbao Vizcaya Argentaria (NYSE: BBV) was lowered to Hold from Buy at Deutsche Bank.
  
• Mediaset SpA (OTC: MDIUY) was downgraded to Sell from Neutral at UBS.
  
• Western Digital (NYSE: WDC) was cut to Underweight from Neutral at JP Morgan.