Merrill upgraded shares of AstraZeneca (NYSE: AZN) to Neutral from Underperform to reflect the company's pipeline momentum and lack of negative catalysts.
Keefe Bruyette upgraded Deutsche Bank (NYSE: DB) to Outperform from Market Perform on valuation as they believe DB should trade at a higher multiple.
Merrill cut Novo Nordisk (NYSE: NVO) to Underperform from Neutral as the firm sees better opportunities elsewhere in the sector.
Merriman downgraded Rackable Systems (NASDAQ: RACK) to Neutral from Buy following the company's mixed Q2 results to reflect its customer concentration and fluctuating margins.
Janus Capital (NYSE: JNS) was downgraded at JP Morgan to Underweight from Neutral.
Fortress (NYSE: FIG) was cut to Sell from Hold at Citigroup.
Analyst initiations:
UBS believes Apple (NASDAQ: AAPL) has a competitive advantage and their checks indicate new Macs, new iPhone colors and potentially new iPods may come early on in the second half of 2008. The firm initiated shares with a Buy rating and $195 target. UBS also initiated Dell Inc. (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) at Neutral.
KeyBanc initiated Bed Bath & Beyond (NASDAQ: BBBY) with an Underweight rating and $25 target based on slowing core growth at Bed Bath and likely margin erosion from the ramp in growth at Christmas Tree Shops and buybuy Baby.
Infineon (NYSE: IFX) was initiated with a Buy rating at Deutsche Bank.
U.S. stock futures were lower Tuesday morning as oil prices continued to decline, with crude falling below $120 a barrel on demand concerns due to the economic slowdown in the U.S. Commodities in general have been declining. Also today, the Federal Reserve will announce its decision regarding interest rates and it is widely expected they will remain unchanged. Similarly, the Fed's outlook statement about outlook and focus may also remain largely the same according to expectations. Meanwhile, overseas, both the ECB and BoE are expected to leave rates unchanged.
One of Yahoo! Inc. (NASDAQ: YHOO)'s largest shareholders, Capital Research Global Investors, had asked to review the vote in last week's re-election of the Internet giant's board. Specifically, I guess, it was surprising the vote showed strong support -- 85% -- for CEO Jerry Yang. There's no sense dancing around this issue; basically the shareholder implies suspicions of wrongdoings (or really really incompetent tallying of votes).
Bloomberg reports that analysts now expect Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to report net losses through the first quarter of 2009 as home-loan delinquencies rise to the highest on record. The the biggest U.S. mortgage-finance companies report tomorrow and according to estimates will show a loss of 74 cents and 60 cents per share respectively. The losses may be greater than expected as we've seen before analysts underestimating the credit losses. It will not be pretty.
Wachovia Corp. (NYSE: WB) shares are down some 7.5% (which is at least better than today's earlier decline of about 10%), after a Morgan Keegan analyst recommended selling the shares. The call follows Wachovia's 30.9% jump last week and comes ahead of a meeting between new chief executive Robert Steel and investors.
The analyst, Robert Patten, who rates Wachovia at Underperform, made the profit-taking call this morning. In his opinion nothing has fundamentally changed to warrant last week's price appreciation. He attributes the gains to short-covering. Wachovia is still facing more credit losses as its option adjustable-rate mortgages (option-ARMs) and commercial real estate (CRE) loans are likely to continue defaulting at an increasing rate.
The analyst also noted that he has already seen this pattern of shares running ahead of fundamentals due to CEO changes. And as long as Wachovia needs to restructure its balance sheet, the stock price hike was premature.
Makes sense to me. With investors' approval of Steel, has Wachovia's balance sheet magically improved? And what can he do to improve it so soon after taking the top job? And even though he said he wouldn't, could that include raising more capital by issuing more common shares (diluting shareholders)?
Anyone who actually had the nerves of steel it takes to play financials this past year may want to pay attention to Patten's call. Recall that Wall Street's leading financial analyst, Meredith Whitney, also downgraded WB to Underperform in July. If you choose to go against her, good luck to you!
Jefferies upgraded shares of Akamai (NASDAQ: AKAM) to Buy from Hold on valuation, as they see a long-term buying opportunity following the recent correction. The firm maintains a $29 target.
Moody's (NYSE: MCO) was upgraded to Overweight from Underweight at Lehman.
Boyd Gaming (NYSE: BYD) was upgraded to Neutral from Underperform at Merrill Lynch.
Analyst downgrades:
Jefferies downgraded shares of Nortel Networks (NYSE: NT) to Hold from Buy on concerns about the company's ability to hit expectations and drive margin expansion in the face of an eroding CDMA revenue stream. The firm lowered their target to $7.25 from $11.
B. Riley cut Charlotte Russe (NASDAQ: CHIC) to Neutral from Buy on concerns about how well the company can perform with the interim management team, especially in light of the current retail environment. The firm lowered their target to $14 from $17. Roth Capital downgraded shares to Sell from Hold to reflect the management uncertainty and lowered their target to $9 from $14.
Goldman cut Warner Music (NYSE: WMG) to Sell from Neutral and Deere (NYSE: DE) to Neutral from Buy.
Analyst initiations:
Banc of America expects top-line growth at Amgen (NASDAQ: AMGN) to be driven by Denosumab and for investors to look to the stock for biotech exposure following the potential acquisition of Genentech (NYSE: DNA). The firm started shares with a Buy rating and $70 target.
Sirius Satellite (NASDAQ: SIRI) was initiated at JP Morgan with a Neutral rating.
Now that the SEC has had some time to sift though all the evidence of why credit rating agencies were so wrong in their view of mortgage-backed securities, the most disturbing finding is that S&P analysts thought their own conclusions about risk were often wrong.
According to The Wall Street Journal (subscription required), an S&P analytical staffer emailed another that a mortgage or structured-finance deal was "ridiculous" and that "we should not be rating it."
What should the government do now that it has the goods? It could fine S&P, and probably will. The fine could never be large enough to match the hundreds of billions of dollars lost by financial firms that put money into the securities. The SEC could bring charges against some of the analysts. As it is, some of them will probably lose their jobs.
The most sensible solution would be to bar S&P from rating derivatives at all. Would that leave a hole in the market? Probably. Other credit agencies might have been involved in similar misdeeds. That would mean they would have to exit the business as well.
The net effect of moving credit ratings out of the business of covering derivatives would almost certainly mean a huge drop-off in the market for the instruments. That might not be such a bad thing.
Douglas A. McIntyre is an editor at 247wallst.com.
Jefferies upgraded shares of Omnicare (NYSE: OCR) to Buy from Hold and raised their target to $37 from $24.50 following the company's Q2 results to reflect improving earnings visibility.
Piper upgraded Motorola (NYSE: MOT) to Neutral from Sell following the company's Q2 results to reflect its continued execution in cost management. The firm raised its target to $9 from $7.
Capital One Southcoast upgraded Patterson-UTI Energy (NASDAQ: PTEN) to Add from Neutral based on additional new builds already under contract and rig reactivations. The firm raised its target to $36 from $32.
Analyst downgrades:
Citigroup downgraded shares of ImClone (NASDAQ: IMCL) to Hold from Buy despite thinking the initial offer from Bristol Myers (BMY) will be raised, as they do not advise chasing shares at current levels. The company's target was raised to $73 from $56.
Morgan Keegan initiated Cicso Systems (NASDAQ: CSCO) with a Market Perform rating, citing the difficult macro environment; the firm believes 2H08 estimates will come down.
Banc of America reinstated coverage of MF Global (NYSE: MF) with a Buy rating and $8.36 target.
U.S. stock futures were mixed Friday morning after General Motors reported a massive loss and sales decline and ahead of what could yet another worriesome jobs report. Unemployment rate is expected to inch higher to 5.6%, while economists expect nonfarm payroll to show a decline 75,000 jobs during July. Other economic reports as well as July car sales could impact the market throughout the session. Seem, though, that after digesting GM's results, futures turned negative, indicating a lower start on Wall Street.
General Motors (NYSE: GM) will likely see some action as the automaker swung to a second-quarter loss of $15.5 billion, or $27.33 a share, as revenue dropped 18% to $38.2 billion. If you think this number missed analyst estimates because of massive charges, you're right, but earnings excluding special items also missed them -- by a mile. Excluding items GM would have lost $6.3 billion, or $11.21 a share. Ouch! Analysts polled by FactSet Research expected a loss of $2.85 a share on revenue of $42.6 billion. GM has been the subject of rumors it is heading straight into bankruptcy, from a quick glance at the results, these will likely not alleviate any such fears. Even as Wagoner cuts costs by $9 billion this year by another 20% trim of payroll and stopping dividend payment, as he plans to boost cash by $17 billion, at this point, I wonder what GM can do to save itself, if it can do anything at all. GM shares are down 7% in premarket trading.
GM will not be alone in the spotlight as Ford (NYSE: F) and other automakers report their U.S. sales for July. Auto sales tracker Edmunds.com is forecasting a 3.3% drop in auto sales compared to a year ago. This comes a day after Standard & Poor's Ratings Services cut its ratings for all three of the U.S.-based automakers further into junk status. S&P expects further sales decline for the rest of the year, with car companies mounting cash losses.
Merrill upgraded Schering-Plough (NYSE: SGP) to Buy from Neutral citing the company's better near-term pipeline outlook with two potential blockbusters to be approved over the next year. Schering-Plough's target was raised to $23 from $20.
Jefferies downgraded shares of Hologic (NASDAQ: HOLX) to Hold from Buy as they see limited near-term catalysts after the company reported a Q3 miss and lowered top-line guidance for FY08. The firm lowered their target to $24 from $28.
Baird downgraded California Pizza (NASDAQ: CPKI) to Neutral from Outperform as they see limited near-term upside given the uncertain 2H08/2009 outlook. The company's target was lowered to $15 from $17.
JP Morgan downgraded Jones Lang LaSalle (NYSE: JLL) and CB Richard Ellis (NYSE: CBG) to Neutral from Overweight due to the continued challenging economic environment.
Analyst initiations:
BC Capital initiated Dollar Financial(NYSE: DLLR) with an Outperform rating and $24 target. The firm likes Dollar's geographically diversified business and valuation.
Baird upgraded Buffalo Wild Wings (NASDAQ: BWLD) to Outperform from Neutral following strong Q2 results as they expect comps momentum, operating leverage, and potentially favorable chicken wing costs to support healthy trends in 2H08.
RBC Capital upgraded Myriad Genetics (NASDAQ: MYGN) to Outperform from Sector Perform citing solid core molecular diagnostics growth and increased confidence that the spin-out will generate better shareholder value.
Analyst downgrades:
Citigroup downgraded shares of Wyeth (NYSE: WYE) to Sell from Hold following the disappointing bapineuzumab data and lowered their target to $39 from $49.
Molson Coors (NYSE: TAP) was downgraded to Neutral from Overweight at JP Morgan.
Sony (NYSE: SNE) was downgraded to Underweight from Neutral at HSBC.
Analyst initiations:
Citigroup initiated Intercontinental Exchange (NYSE: ICE) with a Hold rating and $112 target. The firm believes regulatory concerns and a potential deceleration in energy trading volumes could limit upside in the stock near-term.
Banc of America assumed Walgreen Co. (NYSE: WAG) with a Buy rating and $38 target and believes fewer new pharmacies openings removes an impediment to higher ROIC.
After a day that saw U.S. equity markets decline in the neighborhood of 2%, U.S. stock futures earlier this morning pointed to a rough start Tuesday as well. News late Monday the Merrill Lynch said it's selling a big slice of its asset-backed securities and $8.5 billion in stock, renewed concerns over the financial sector health. But futures have started creeping upward, ahead of the latest readings on house prices with the Case-Shiller home price index for May and Conference Board reading of consumer confidence for July.
Meanwhile, we're still in the middle of earnings season and today
Northrop Grumman (NYSE: NOC), Viacom (NYSE: VIA), Valero Energy Corp. (NYSE: VLO), United States Steel Corp. (NYSE: X)
Electronic Arts (NASDAQ: ERTS) will report after the close of tradin
The big story making headlines since late Monday is the bombshell Merrill Lynch (NYSE: MER) that it is taking an enormous $5.7 billion write-down on losses from mortgage-backed securities (MBSs) and plans to raise $8.5 billion. MER shares already dropped 11.6% Monday before the news was out, and while they're rebounding 2.75% this morning, many are very uncomfortable with Merrill's current situation and actions.
Alcatel-Lucent (NYSE: ALU), the French telecommunications giant, is finally getting rid of its CEO Patricia Russo and Chairman Serge Tchuruk who will both resign later this year. It's no surprise shares are rebounding over 6% in premarket trading. ALU also reported its sixth consecutive quarter of losses. Alcatel-Lucent reported a net loss of 1.1 billion euros ($1.73 billion) for the second quarter including an euro810 million ($1.3 billion) goodwill writedown.
Amgen Inc. (NASDAQ: AMGN) is having a really good day today. Its shares closed up 12.17% to $60.48 (on a day markets were down in the neighborhood of 2%) after it said late Friday a study on denosumab, a bone-strengthening drug, met its desired results and showed statistically significant improvements over a placebo.
Amgen shares rocketed 17% at some point as denosumab has the potential to become a blockbuster drug, especially with women with postmenopausal osteoporosis, a market that could represent $8 billion and $10 billion by 2010. The strong study results also improve the drug's chances with FDA approval. Analysts just loved the results of the study (although the details won't be out until September), upgrading the shares and their target prices.
To top it off, Amgen reported second-quarter financial results after the close, beating analyst estimates. The biotechnology giant recorded net income of $941 million, or 87 cents a share, lower than last year's period, but excluding acquisition-related and stock-compensation costs, earnings rose to $1.14 a share from $1.13. Revenue rose 1% to $3.76 billion. Analysts forecast profit of $1.02 per share on revenue of $3.58 billion, according to a survey by Thomson Financial. Looking ahead, Amgen raised both its earnings and revenue guidance higher than what Wall Street expected. Analysts, in general, liked these results too.
Not all has been rosy with Amgen lately, as the sales of Aranesp, its anemia treatment and what is considered Amgen's most important product, show. Aranesp sales declined 13% on safety concerns. Sales of Epogen, the older treatment, also declined somewhat. Still the sales of both beat estimates.
Amgen's stock has already been punished for the Aranesp concerns throughout 2007, and has been recovering since, today hitting a 52-week high. Amgen showed better-than-expected sales across all products, even its under-scrutiny anemia drugs; it showed it's not resting and that it can and will recover. Combine that with the strong clinical trial results for denosumab, and the potential is great.
Amgen shares are up about 2.8% in after-hours trading to $62.15.
U.S. stock futures were lower early Monday as investors concerns over the banking sector grew. Federal regulator seized two more banks, 1st National Bank of Nevada and First Heritage Bank, which were scheduled to reopen on Monday as Mutual of Omaha Bank branches. The Senate also passed a major housing bill over the weekend, and this could actually give a boost to mortgage lenders like Fannie (NYSE: FNM). Meanwhile, oil prices rebounded as European markets declined. As of 8:00 a.m., it seems Wall Street would start weak.
Reporting earnings today are Kraft Foods (NYSE: KFT) - Kraft reported 58 cents earnings per share excluding items, beating estimates of 50 cents; Verizon Communications (NYSE: VZ) - Verizon reported earnings of 67 cents per share, excluding items, beating estimates by 2 cents; and after the close of trading, Amgen (NASDAQ: AMGN).
Amgen (NASDAQ: AMGN) stock is jumping over 17% in premarket trading after announcing late Friday its experimental osteoporosis drug, denosumab, significantly reduced the risk of bone fracture in post-menopausal women in a large trial. Rodman & Renshaw and Jefferies & Co both upgraded Amgen to Market Outperform and to Buy respectively.
Unilever NV (NYSE: UL) will sell its North American laundry detergents business to private equity investor Vestar Capital Partners for $1.45 billion (euro924 million). Unilever said the sale consistent with its strategy of divesting non-core businesses and concentrating on a few core ones.
Jefferies upgraded shares of Ensco International (NYSE: ESV) to Buy from Hold on valuation as they find the company's long-term EPS growth and potential upside from the GOM/Mexico jack-up market compelling.
Friedman Billings upgraded Juniper (NASDAQ: JNPR) to Outperform from Market Perform following the better-than-expected Q2 report. The firm raised Juniper's target to $29 from $27.
Friedman Billings upgraded shares of Southwestern Energy (NYSE: SWN) to Outperform from Market Perform on valuation following the recent weakness. Southwestern's target was raised to $43 from $40.
Merrill also upgraded Delta (NYSE: DAL) to Buy from Neutral.
Analyst downgrades:
Baird downgraded Crocs (NASDAQ: CROX) to Neutral from Outperform following the company's weak Q2 report and guidance.
Merriman cut Nautilus Group (NYSE: NLS) to Sell from Neutral to reflect the company's dependence on the consumer home fitness market at a time when consumer spending trends are weakening. The firm believes shares are overvalued and could potentially decline to the $4.00-$4.50 level.
E.W. Scripps (NYSE: SSP) was downgraded at JP Morgan to Neutral from Overweight.
HSBC lowered Daimler AG (NYSE: DAI) to Neutral from Overweight.
U.S. stock futures were lower Friday morning, a day after a selloff triggered by housing data. Today investors are bracing for more housing data at 10:00 a.m. EDT after already hearing that foreclosures soared 121% during the second quarter. Other point of interest will be durable goods data reported an hour before the opening bell. Meanwhile, oil continued the steady climb that started Thursday as the dollar weakens, trading above $126 a barrel. It's Friday, and no many earnings reports are due.
While there aren't many earnings reports today, there are a few including Fortune Brands (NYSE: FO), Netflix (NASDAQ: NFLX) and Black & Decker (NYSE: BDK) among others.
Crocs (NASDAQ: CROX) shares are tanking over 44% to $5 after after it cut its earnings outlook significantly on softer demand for its plastic shoes. With all those knockoffs around, is it any wonder? Robert W. Baird downgraded Crocs from Outperform to Neutral, slashing the target price from $21 to $5.
Meanwhile, Juniper Networks (NASDAQ: JNPR) surged 12% in premarket trading after the company not only beat estimates when reporting quarterly results Thursday, but also increased its sales forecast for the third-quarter much higher than analyst estimates. Friedman Billings and Citigroup both upgraded Juniper to Outperform and Buy respectively.
In deal news, Clear Channel Communications (NYSE: CCU) shareholders on Thursday approved a $17.9 billion takeover by private equity funds Thomas H. Lee Partners and Bain Capital. This ends the 20-month long effort.
eBay, Inc. (NASDAQ: EBAY) shares are falling today on no obvious news, but after CNBC analyst and BloggingStocks.com's own Jim Cramer said on his Mad Money TV show last night that he could not get behind the company, and that someone should buy them "and put them out of their misery." When Cramer talks, people have a habit of acting, so this could be the reason for the company's swoon. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on eBay.
After hitting a one-year high of $40.73 in October, the stock hit a one-year low of $23.52 last week. This morning, EBAY opened at $25.21. So far today the stock has hit a low of $24.75 and a high of $25.41. As of 1:45, EBAY is trading at $24.80, down 0.58 (-2.3%). The chart for EBAY looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $30 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in three months as long as EBAY is below $30 at October expiration. eBay would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.
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Analyst upgrades:
U.S. stock futures were lower Tuesday morning as oil prices continued to decline, with crude 
U.S. stock futures were mixed Friday morning after General Motors reported a massive loss and sales decline and ahead of what could yet another worriesome jobs report. Unemployment rate is expected to inch higher to 5.6%, while economists expect nonfarm payroll to show a decline 75,000 jobs during July. Other economic reports as well as July car sales could impact the market throughout the session. Seem, though, that after digesting GM's results, futures turned negative, indicating a lower start on Wall Street..gif){kind=logo}
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