Analyst upgrades:

• Citigroup upgraded Advanced Micro (NYSE: AMD) to Buy from Hold and raised its target to $5.50 from $4.25 citing valuation and expectations for the company's competitive position and gross margins to improve.
• Barclays upgraded American Express (NYSE: AXP) to Overweight from Equal Weight citing long-term earnings growth as the company benefits from declining charge-offs and credit costs. The firm has a $38 target on the stock.
• JPMorgan upgraded Arch Coal (NYSE: ACI) to Overweight from Neutral and raised its target to $22 from $19 citing the FTC approval for the acquisition of Jacobs Ranch mine and valuation.
• Bebe Stores (NASDAQ: BEBE) was upgraded to Overweight from Equal Weight at Stephens.
• Cheesecake Factory (NASDAQ: CAKE) was upgraded to Neutral from Underweight at Piper Jaffray.
• Ashland (NYSE: ASH) was upgraded to Buy from Hold at KeyBanc.

MOST NOTEWORTHY: QLogic (QLGC), Cnet Networks (CNET), Taiwan Semiconductor (TSM), Darden Restaurants (DRI) and Anadys Pharma (ANDS) were today's noteworthy downgrades:

• QLogic (NASDAQ: QLGC) was cut by several firms:
  
• QLogic was cut to Neutral from Outperform and removed from JP Morgan's Focus List due to the lack of catalysts to drive shares higher.
  
• Caris cut shares to Average from Above Average and Pacific
  
• Crest downgraded QLogic to Sector Perform from Outperform as the company's profits decline.

• Citigtroup downgraded CNet Networks (NASDAQ: CNET) to Hold from Buy as they no longer expect material revenue growth acceleration and operating leverage in 2H07; First Albany cut shares to Neutral from Buy.

• HSBC downgraded shares of Taiwan Semiconductor (NYSE: TSM) to Neutral from Overweight to reflect worse than expected pricing pressures.

• Matrix downgraded shares of Darden Restaurants (NYSE: DRI) to Hold from Buy on increasing competition and rising costs.

• Piper cut Anadys Pharma (NASDAQ: ANDS) to Underperform from Outperform following the company's announcement that it has discontinued development of ANA975...

OTHER DOWNGRADES:

• First Albany cut Zimmer Holdings (NYSE: ZMH) to Buy from Strong Buy.

• Bear Stearns downgraded AutoNation (NYSE: AN) to Peer Perform from Outperform.

• Piper Jaffray downgraded Volcom (NASDAQ: VLCM) and Sierra Wireless (NASDAQ: SWIR) to Market Perform from Outperform.

• Bernstein downgraded Coca-Cola Enterprises (NYSE: CCE) to Underperform from Market Perform.

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

Smith & Nephew plc (NYSE:SNN) announced the acquisition this morning of Swiss company Plus Orthopedics for $889 million in cash. This will solidify Smith & Nephew's position as the number 4 global player. The other three major firms are Stryker Corp. (NYSE:SYK), Zimmer Holdings (NYSE:ZMH), and soon to be acquired Biomet Inc. (NASDAQ:BMET). Biomet is undergoing due diligence by a group of private equity firms led by the Blackstone Group. The transaction is expected to close by October of this year.

The orthopedic sector has the wind at its back. The approval process for an orthopedic device is rigorous, but not as lengthy as the cardiac device sector. The marketplace is global in nature and the demographics are about to enter the sweet spot.

With 78 million U.S. baby boomers alone, and another 80 million-plus baby boomers in the European markets, the aging of this group is ripe for the sector. New hips, knees, elbows and shoulders will see record recipients as each year unfolds. Besides the basic joint-replacement products, the spinal sector is also expected to see massive growth. Minimally invasive surgical procedures are expanding the addressable market as the risk profile for such surgeries is significantly less. The dread of osteoporosis affects nearly 700,000 women in the United States alone.