Analysts' Upgrades and Downgrades

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Wednesday's Analysts' Upgrades and Downgrades

TSC Staff

Change in Ratings

Coverage on Cardinal Health(CAH Quote) reinstated with a Buy rating at Goldman. View company as a high-quality and more focused franchise with strong fundamental outlook driven by opportunities for margin gains from improvements in nondrug wholesale business and restructuring effects. Expect solid earnings growth and aggressive share repurchase to drive stock. Target price at $86.

Caterpillar(CAT Quote) was upgraded to Outperform at Wachovia. Earnings growth should reaccelerate to 20% in 2008, as the North American residential market is showing signs of stabilizing.

Goldman is downgrading IBM(IBM Quote) to Neutral from Buy, based on slowed U.S. spending growth and lack of near-term catalysts. Company's Americas segment, which makes up 42% of revenue, grew only 1%. Goldman also notes that strongest business -- software -- contributed only 20% of growth organically, vs. 80% from acquired software. Maintained price target at $107.

Credit Suisse is downgrading IBM to Neutral from Outperform. Cites concerns over soft U.S. enterprising and execution issues in all three of its major segments. Lowered target price to $100 from $107.

Intel(INTC Quote) numbers raised at UBS. Price target lifts to $27 from $25, and full-year 2008 EPS estimate rises to $1.43 from $1.41. Reiterates Buy rating.

INTC was upgraded to Overweight at JPMorgan. Margins appear to have hit a bottom, as prices stabilize and the company continues to cut costs.

Interpublic(IPG Quote) was upgraded from Neutral to Overweight at JPMorgan. Company is winning new business, and the outlook for Europe has improved. Company has also improved its balance sheet.

Moody's(MCO Quote) was downgraded from Neutral to Sell at Merrill Lynch. Risk/reward becomes more negative after the first quarter, as slower growth could contract the valuation multiple.

Morgan Stanley initiates coverage of Companhia Vale de Rio Doce(RIO Quote) with an overweight rating and $50 price target.

Teradyne(TER Quote) was downgraded from Outperform to Sector Perform at CIBC. Stock has gradually moved higher over the recent months and lacks a significant catalyst to take it further in the near term. $17 price target.

Wendy's(WEN Quote) was downgraded from Market Perform to Underperform at Wachovia. Valuation call, as the new breakfast lineup faces considerable competition.

Stock Comments/EPS Changes

Adtran(ADTN Quote) numbers raised at UBS. Price target lifts to $27.50 from $25, and 2007 EPS estimate rises to $1.47 from $1.43. Reiterates Neutral rating.

Steel Dynamics(STLD Quote) numbers raised at Jefferies. Price target lifts to $41 from $33, but 2007 EPS estimate lowered to $4.04 from $4.12. Reiterates Hold rating.

2007 estimates on Seagate(STX Quote) lowered to $1.38 from $1.53 at Goldman. Gross margins of 21.6% came in well below Goldman forecast of 24.3%. See deteriorating industry pricing and lower volumes hurting earnings. Price target cut to $21.50 from $25 and maintained Neutral rating.

STX numbers lowered at UBS. Price target drops to $23 from $26, and 2007 EPS estimate lowered to $1.40 from $1.66. Reiterates Neutral rating.

Credit Suisse said it is lowering its 2007 EPS estimates on STX to $1.90 from $2.29 following difficult third-quarter results, which included weaker gross margins. Lowered target price to $28 from $35.

Goldman is cutting its target on Yahoo!(YHOO Quote) to $34 from $35 after company reported disappointing top-line growth on decelerating branded advertising. Year-over-year revenue growth of 9% was significantly below hopes for midteens results. Maintained Neutral rating on belief that risk/reward remains unfavorable.

YHOO numbers lowered at Jefferies. Price target drops to $36 from $38, and 2007 EPS estimate lowered to $0.51 from $0.55. Reiterates Buy rating.