Wall to Wall Street Coverage: Upgrades and Downgrades
When suddenly, last summer the 98-year-old son of Austria's last emperor and a champion of European unity expired on July 4 of all days, it appeared America was fated to be forever linked with bad news occurring across the Atlantic. Thankfully, yesterday's upbeat action in the Dow Industrials showed that, for a single session at least, we can occasionally decouple from our continental cousins. Gains were slight, but stateside stocks still snapped a three-session slump after initial unemployment claims fell to their lowest level since May of '08 and December's Philly Fed Index unexpectedly improved. (It's always sunny in Philadelphia? Perhaps, but a fat lot of good that did First Solar (FSLR), which followed Wednesday's 21.42% tumble with a downgrade-related fall of 5.98% to again outpace all S&P 500 decliners.) The new head of the International Monetary Fund warned ominously of another "Great Depression" in the EU and Standard & Poor's said "We believe the U.S. banking industry is undergoing its most radical structural change since the Great Depression." On that cheery note, Prozac maker Eli Lilly (LLY) promptly gained 2.95% to finish at a fresh multi-year peak.
Other standout stocks included Michael Kors (KORS), up a tidy 21.00% on the first trading day for this clothing company founded in 1981. There must have been something fashionable in the water three decades ago; that year also featured the debut of Guess Inc (GES) and of course Brooke Shields' unforgettable conversion to Calvinism. Meanwhile Molson Coors Brewing (TAP) rose 2.97%, which must have caught the eye of Newt — who has seen The Hangover some seven times — ahead of today's quadruple witching. From witches to wizards, Scholastic Corp (SCHL) fared just fine without Harry Potter, climbing 4.17% after posting an impressive Q2 profit. Jon Corzine, who again struggled to account for MF Global's missing $1.2 billion, clearly boosted sales at the educational publisher, brushing up for his third round of congressional testimony by reading its Taylor Lautner math tutorial. (Hey, in fairness to the ex-Goldman Sachs (GS) CEO, math is hard — ask any realtor.) And as we finally exited Iraq, Pottery Barn owner Williams-Sonoma (WSM) bucked a down day by sliding 2.09%. An eerily fitting coda for a nine year conflict. Today's corporate earnings are expected to include Angeion Corp (ANGN) and Darden Restaurants (DRI).
Initiations:
Avis Budget (CAR): Shares are begun with an Equal Weight at Barclays.
ArcelorMittal (MT): The steel stock is resumed with a Buy at Royal Bank of Scotland.
Discover Financial Services (DFS): DFS gets begun with a Buy at Guggenheim.
Qualcomm (QCOM): Lazard launches Buy rated coverage on the tech firm. For related content, see Broadcom Joins AT&T and Best Buy in Piling Up the Ammunition for Apple Bulls.
Southern Copper (SCCO): SCCO is started with an Equal Weight with Morgan Stanley.
Banking sector: UBS begins Buys on, among others, U.S Bancorp (USB) and State Street (STT). Its new Neutrals include Wells Fargo (WFC), Bank of New York Mellon (BK), Northern Trust (NTRS), and Regions Financial (RF).
Credit Services: Wells Fargo has fresh Market Performs on First Cash Financial (FCFS) and EZCORP Inc (EZPW). It establishes Outperforms on Cash America International (CSH) and DFC Global (DLLR).
Supermarket stocks: Cantor Fitzgerald starts Sell rated coverage on Safeway (SWY), assigning it a price objective of $16. The broker has Holds on Kroger (KR) ($24 target price) and Sysco Corp (SYY) ($29) and begins Supervalu (SVU) with a Buy and $10 target.
Business services: Morgan Keegan initiates Outperforms on Green Dot (GDOT) ($36 target on a company it says serves underpenetrated end markets) and NetSpend (NTSP) ($9).
Container companies: Jefferies has a Hold on Packaging Corp of America (PKG) and rolls out Buy rated research on Rock-Tenn Co (RKT).
SunCoke Energy (SXC): Shares are begun with a Buy recommendation and $15 objective at KeyBanc Capital, which notes it is the only publicly traded "pure-play" metallurgical coke producer in the United States. As such, SXC offers investors a unique and defensive growth avenue in a mature domestic steel sector.
Enbridge Inc (ENB): The Canadian pipeline company is picked with a Neutral at Citigroup
Enduro Royalty Trust (NDRO): Robert W. Baird resumes the stock at Outperform with a $23 target.
Ocwen Financial (OCN): Bank of America-Merrill Lynch launches at a Buy.
HollyFrontier (HFC): Citi has a Buy on HFC.
Thoratec (THOR): Goldman gives THOR a Neutral rating.
TransDigm Group (TDG): The aerospace outfit is a new Neutral at Goldman Sachs.
Upgrades:
Amgen (AMGN): The world's biggest biotech gets a Neutral-from-Sell increase at Goldman.
AK Steel (AKS): Shares are upgraded to Outperform from Market Perform with Wells Fargo.
Carnival Corporation (CCL): The cruise company is upgraded to Overweight from Neutral at HSBC Securities, which hoists its target to $38 from $34. The broker believes they will benefit from U.S. consumer resilience, higher-end European exposure, and bunker fuel trends. Shares are currently trading higher ahead of the opening bell as a result.
Central European Distribution Corp (CEDC): The New Jersey-based purveyor of Polish vodka gets moved to Equal Weight from Underweight at Morgan Stanley.
Transocean (RIG): Global Hunter Securities raises its rating on RIG to Neutral from Reduce with a $43 objective after yesterday's fleet status report, the recent 29.9 million share offering, and $2.5 billion in debt placements. Also read Also read Chevron, Transocean Face $10 Billion Fine in Brazil Oil Suit.
Linear Technology (LLTC): The specialized semiconductor stock is taken to Outperform from Perform with a $36 price target at Oppenheimer, which says a broad inventory re-stocking in the first half of 2012 will breathe new life into the equity.
Liberty Global (LBTYA): JPMorgan lifts LBTYA to Overweight from Neutral.
AthenaHealth (ATHN): Oppenheimer increases ATHN to Perform from Underperform after a recent share price slide. It expects the stock to settle back to the low-to-mid $40s, as they believe short covering provided support yesterday.
Kosmos Energy (KOS): The stock is upgraded to Overweight from Equal Weight by Barclays.
Basic Energy Services (BAS): BAS gets a Buy-from-Hold boost at Dahlman Rose, which takes its target up by $4 to $25 on account of an increasingly attractive valuation.
FleetCor (FLT): Wells Fargo moves the shares to Outperform from Market Perform.
Downgrades:
Yahoo (YHOO): The Internet outfit is downgraded to Equal Weight from Overweight at Evercore.
Research In Motion (RIMM): Shares of the beleaguered BlackBerry maker, trading at its lowest levels since 2004 after last night's earnings disappointment, are reduced to Market Perform from Outperform by BMO Capital this morning.
Cablevision (CVC): Bank of America-Merrill Lynch cuts the company by an unusual 180 degrees, to Underperform from Buy. Also see Media and Communications Stocks Reporting Big News.
DirecTV (DTV): The stock is now Neutral from Overweight at Atlantic Equities.
Ericsson (ERIC): The Swedish telecom titan gets taken to Neutral from Buy at UBS, sending shares lower before the bell.
SAP AG (SAP): Staying in Europe, German software giant SAP is now Neutral from Buy at Bank of America-Merrill.
Duff & Phelps (DUF): DUF gets downgraded to Market Perform from Outperform at Keefe Bruyette.
ZOLL Medical (ZOLL): First Analysis moves shares to Equal Weight from Overweight.
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