Analyst Upgrades

• Tiffany (TIF) to outperform from perform at Oppenheimer.
• Kellogg (K) to outperform from market perform at Wells Fargo.
• Citizens Republic (CRBC) to outperform from market perform at FBR Capital.
• Research in Motion (RIMM) to equal weight from underweight at Morgan Stanley.
• MWI Veterinary Supply (MWIV) and Elster (ELT) to overweight from neutral at Piper Jaffray.
• Paetec Holding (PAET) and Patterson-UTI Energy (PTEN) to buy from hold at Citigroup.
• New Gold (NGD) to outperform from market perform at BMO Capital.
• Aviat Networks (AVNW) to buy from hold at Needham.
• Abiomed (ABMD) to buy from hold at Jefferies.
• Animal Health (AHII) to outperform from neutral at RW Baird.
• PNM Resources (PNM) to overweight from neutral at JPMorgan.

Stocks fought on and off all day over whether they were going to close up or down, and the red or black verdict was one that was not easy to predict until immediately before the closing bell. Europe was soft on earnings. A positive confidence number was not enough to send shares remarkably higher.

Here were today's closing bell levels:

Dow Jones 11,169.46 +5.41 (0.05%)
S&P 500 1,185.65 +0.03 (0.00%)
Nasdaq 2,497.29 +6.44 (0.26%)

Top Analyst Calls

Analyst Upgrades

• Soleil upgraded Thor Industries (THO) to buy from hold after the company said its accounting review will not lead to changes to previously taken accounting positions. The firm raised its target for shares to $45 from $28.
• Citigroup upgraded Family Dollar (FDO) to buy from hold, citing valuation and its positive view on the dollar store industry. The firm upped its target for shares to $47 from $44.
• Wells Fargo upgraded Albany Molecular (AMRI) to outperform from market perform, citing valuation and a stabilizing core business.
• Goldman Sachs (GS) upgraded to overweight from neutral at JPMorgan.
• Patterson-UTI Energy (PTEN) was upgraded to equal weight from underweight at Barclays.
• BP (BP) was raised to buy from hold at RBS.

Analyst Upgrades

• UBS upgraded Yum! Brands (YUM) to buy from neutral, citing valuation, improving momentum and stabilizing China fast-food sales. The firm raised its target to $44 from $38.
• United Technologies (UTX) was upgraded to outperform from neutral at Cowen.
• Needham upgraded Arris (ARRS) to buy from hold, citing valuation and positive near-term business trends. The firm has a $16 price target on shares.
• Warnaco (WRC) was upgraded to outperform from neutral at Credit Suisse.
• Aetna (AET) was upgraded to neutral from underperform at BofA/Merrill.
• Nestle (NSRGY) was upgraded to overweight from neutral at JPMorgan.

MOST NOTEWORTHY: Potash, Cadbury Schweppes and Zoran were today's noteworthy upgrades:

• Citigroup upgraded shares of Potash (NYSE: POT) to Buy from Hold and raised its target to $178 from $141 to reflect their expectation for a more bullish outcome from the ongoing China Potash contract negotiations.
• Cadbury Schweppes (NYSE: CSG) was raised to Overweight from Neutral at JP Morgan to reflect the company's takeout potential and cash returns.
• Oppenheimer raised its rating on Zoran (NASDAQ: ZRAN) to Outperform from Perform on valuation, as they believe the recent weakness is overdone.

OTHER UPGRADES:

• Pep Boys (NYSE: PBY) was upgraded to Market Weight from Underweight at Thomas Weisel.
• JMP Securities upgraded Actuate (NASDAQ: ACTU) to Strong Buy from Outperform.
• Goldman raised Broadcom (NASDAQ: BRCM) to Buy from Neutral.

MOST NOTEWORTHY: Brokers and asset managers, Credit Suisse, Barclays and HBOS PLC were today's noteworthy downgrades:

• Lehman downgraded the brokers and asset managers sector to Neutral from Positive and Merrill Lynch (NYSE: MER) and Bear Stearns (NYSE: BSC) to Equal Weight from Overweight. The firm cited weakness in the credit markets for the Bear Stearns downgrade and potential further write downs at Merrill Lynch for its downgrade.
  
• Bear Stearns downgraded shares of Credit Suisse (NYSE: CS) to Peer Perform from Outperform as they see risks to 2008 estimates from an expected decline in investment-banking revenue.
  
• Barclays (NYSE: BCS) was downgraded to Underweight from Neutral and HBOS PLC (OTC: HBOOY) was downgraded to Underweight from Overweight at HSBC to reflect the potential for higher write downs on debt securities and slower revenue growth.

OTHER DOWNGRADES:

• British Airways (OTC: BAIRY) was downgraded to Sell from Hold at ABN Amro.
  
• Merrill downgraded British Sky Broadcasting (NYSE: BSY) to Neutral from Buy.
  
• Merriman downgraded Zoran (NASDAQ: ZRAN) to Neutral from Buy.
  
• Deutsche Bank downgraded Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) to Hold from Buy.

MOST NOTEWORTHY: Athenahealth, Brocade Communications Systems, Royal Bank of Scotland and Human Genome were today's noteworthy initiations:

• Caris initiated shares of Athenahealth (NASDAQ: ATHN) with an Average rating and $26 target, as they believe an unachievable growth rate is priced into shares at current levels.
• Brocade Communications Systems (NASDAQ: BRCD) was initiated with a Neutral rating at UBS.
  
• Royal Bank of Scotland (NYSE: RBS) was initiated with an Underweight rating at Lehmen.
  
• JP Morgan resumed coverage of Human Genome Sciences (NASDAQ: HGSI) with a Neutral rating.

OTHER INITIATIONS:

• Lazard resumed coverage of Zoran (NASDAQ: ZRAN) with a Hold rating and Sigma Designs (NASDAQ: SIGM) with a Buy rating.
  
• Stifel initiated Tortoise Energy Capital (NYSE: TYY) with a Buy rating and $32 target.
  
• HSBC initiated DSG International (OTC: DSITY) with an Overweight rating.

Well, the speculation (finally) turned into a news story: Israel's prime minister, Ehud Olmert, announced yesterday that he's fighting prostate cancer.

Whether the market agrees or not with Olmert's Kadima government politics, the Tel Aviv stock market was spooked yesterday at the premonition that something was wrong, really wrong with Olmert. Rumors arose that he was suffering from an advanced neurological disorder that would prevent him from continuing in office.

I could almost hear Benjamin Netanyahu buttoning-up to come in off the bench.

In spite of the ongoing instability in the Israeli government, the Israeli economy and stock market continues to smoke. The Israeli shekel has appreciated strongly versus the dollar (8.5% since August alone) and the country has seemed to rein in inflation (1.5% over 12 months). Export growth has moderated somewhat, but should still put in a strong showing at somewhere between 9% and 10%. GDP growth probably will check in around 5% this year. Check out what Bank of Israel governor (and previous vice chairman of Citigroup) Stanley Fischer had to say earlier this year about Israel's macroeconomic strength.

Israel's economy from a macro perspective is interesting. But as a whole, there are other economies with higher GDP growth. What makes Israel really interesting is its technology export industry. After the United States, Israel has the most number of companies listed on the NASDAQ. Recent high-fliers like Zoran Corp. (NASDAQ: ZRAN) and Ceragon (NASDAQ: CRNT) make for some interesting investment opportunities in small cap and mid cap companies.

I like to think of investing in some of the smaller Israeli companies as late-stage venture investing. Home runs are certainly possible; you just need to do the work.

Stay tuned.

The art of effectively processing the digital signals used by consumer electronic devices is constantly evolving, and the most successful makers of the chips that rule the process are those who define the evolutionary path. An industry leader in that regard is headquartered in Sunnyvale, California, and works from offices around the world.

Zoran Corporation (NASDAQ: ZRAN) makes specialized integrated circuits and software for digital video and audio compression applications. Its devices are used in DVD players and recorders, digital cameras, multimedia mobile phones, audio speakers and receivers, digital televisions, set-top boxes, and digital printers. Zoran also licenses its intellectual property solutions to other semiconductor manufacturers. The company's customer list includes such names as Hewlett-Packard (NYSE: HPQ), SanDisk (NASDAQ: SNDK) and Sony (NYSE: SNE).

Investors were pleased earlier in the week, when the firm reported Q3 EPS of 51 cents and revenues of $146.4 million. Analysts had been looking for 39 cents and $138.4 million. Management also guided Q4 EPS to 30-34 cents (30 cent consensus) and Q4 revenues to $128-$132 million ($128.14M consensus). CIBC World Markets, Needham, Wedbush Morgan and Deutsche Securities subsequently declared the issue a "buy" and established price targets in the $27-$30 range. The share price popped on the news and then moved into a bullish flag consolidation pattern. Stocks 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 two "strong buys," ten "buys," five "holds" and one "sell." Analysts expect an 18% average annual growth rate through the next five years. The ZRAN Price to Sales ratio (2.61), Price to Book ratio (2.05) and EPS Growth rate (601.70%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. Over the past 52 weeks, ZRAN has traded between $13.45 and $25.07. A stop-loss of $21.45 looks good here.

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

MOST NOTEWORTHY: Apollo Group, Zoran, AmSurg Corp, Apple and Tribune Co were today's noteworthy upgrades:

• Baird upgraded shares of Apollo Group (NASDAQ: APOL) to Outperform from Neutral based on positive enrollment and revenue trends, margin improvement, and a strategic international announcement.
  
• CIBC upped its rating on Zoran Corporation (NASDAQ: ZRAN) to Sector Outperformer from Sector Performer following strong Q3 results and guidance.
  
• Jefferies upgraded shares of AmSurg Corp (NASDAQ: AMSG) to Buy from Hold as they believe the new CEO is preparing to drive earnings growth through acquisitions.
  
• ThinkEquity continues to expect Apple (NASDAQ: AAPL) to outpace the industry in growth. The firm upgraded shares to Buy from Accumulate.
  
• Barrington upgraded shares of Tribune Company (NYSE: TRB) to Market Perform from Underperform on valuation, as they believe the current price significantly discounts the risks of the going private transaction getting done.

OTHER UPGRADES:

• Citigroup upgraded Jarden Corporation (NYSE: JAH) and Teradyne (NYSE: TER) to Buy from Hold.
  
• Lehman upgraded SunPower Corporation (NASDAQ: SPWR) to Overweight from Equal Weight.
  
• HSBC upgraded ArcelorMittal (NYSE: MT) to Overweight from Underweight.
  
• WestLB raised Roche Holding (OTC: RHHBY) to Add from Hold.

MOST NOTEWORTHY: EMC Corp (EMC), NetEase.com, Inc (NTES), Wireless Ronin Technologies (RNIN), Activision (ATVI) and GameStop Corp (GME) were today's noteworthy initiations:

• BMO Capital expects upside to EMC Corp's (NYSE: EMC) June quarter estimates, but only sees limited share upside from current levels. The firm started shares with a Market Perform rating and $21 target.

• Pali Research believes NetEase.com (NASDAQ: NTES) must address the discontinuity in its growth and started shares off with a Neutral rating.

• Barrington expects Wireless Ronin (NASDAQ: RNIN) to benefit from growth towards broadcasting to the outdoor component of out-of-home and views the company as an emerging growth opportunity that is starting with a strong technological base and management team. The firm started shares with an Outperform rating.

• First Albany initiated shares of GameStop (NYSE: GME) with a Buy rating, citing upside potential to 2008 estimates.

• Activision (NASDAQ: ATVI) was also initiated at First Albany, with a Buy rating, as the firm is expecting strong results and guidance...

OTHER INITIATIONS:

• Jefferies initiated Polycom (NASDAQ: PLCM) with a Buy rating.

• Deutsche Bank started Zoran (NASDAQ: ZRAN) with a Buy rating.

• Stanford initiated Urban Outfitters (NASDAQ: URBN) with a Buy rating.

• Banc of America initiated Garmin (NASDAQ: GRMN) with a Neutral rating.

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