Analysts' Upgrades and Downgrades

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Analysts' Upgrades, Downgrades: Wal-Mart

TSC Staff

Change in Ratings

Alberto-Culver (ACV) downgraded at Citigroup from Buy to Hold on valuation. While Citi continues to believe company will deliver healthy growth in 2009, believes that all the good news is priced into the stock. Maintain $26 price target.

C.R. Bard (BCR) downgraded at Citigroup to Hold from Buy based on valuation. Says foreign-exchange headwinds and pending approval on several new products suggests limited upside to consensus estimates. Raised target price to $91 from $88.

Burger King (BKC) upgraded at Wachovia to Outperform. Valuation call, and the company is on track to meet near-term expectations, despite commodity pressures.

Carnival (CCL) upgraded at Deutsche Bank from Sell to Hold. $28.50 price target. Dividend will likely be suspended though 2010, and visibility remains poor.

Ciena (CIEN) downgraded at Merrill from Neutral to Underperform. Relative valuation call, as the 2009 consensus analyst estimate appears too optimistic.

Diamond Offshore (DO) downgraded at Goldman Sachs to Neutral from Buy based on valuation following recent outperformance. Note that shares trade at a 23% premium to peers on EV/EBITDA. Note increase in special quarterly dividend. Price target at $75.

Emerson (EMR) downgraded at Merrill from Buy to Neutral. $38 price target. Estimates also cut, as the company will be hurt by the global slowdown.

International Paper (IP) downgraded at Goldman Sachs to Neutral from Buy based on deteriorating sector outlook. Expect declining prices and volumes in uncoated freesheet, pulp and containerboard. Price target cut to $17 from $25.

Lender Processing Services (LPS) initiated Equal-weight at Morgan Stanley. Believes company will beat consensus estimates in 2009, but 2009 will be a peak year with potentially lower 2010 and 2011.

Motorola (MOT) downgraded at Merrill from Buy to Neutral. $7 price target. Company needs to turn the business around at many different levels.

News Corp. (NWS) downgraded at Oppenheimer to Perform. Estimates also cut ahead of earnings, to reflect prior recessionary levels. $12 price target.

Pulte Homes (PHM) downgraded at Citigroup to Hold from Buy based on valuation. Stock is up 32% since Monday, higher than the 24.5% return in the homebuilder index. Maintained $11 target price.

Packaging Corp. (PKG) downgraded at Goldman Sachs to Neutral from Buy. Expect stock to be rangebound during cyclical downturn, with declining earnings and margins. Price target cut to $14 from $22.

Wal-Mart (WMT) upgraded at J.P. Morgan to Overweight from Neutral based on improving comps, expected improvement in international margins, and attractive capital allocation revisions that should boost free cash flow and ROI. Believe company is perfectly positioned to outperform and capture market share in recessionary environment. Price target raised to $65 from $56.

Stock Comments/EPS Changes

Owens-Illinois (OI) price target slashed at Goldman to $28 from $55 based on shift in risk premium and expected currency headwinds. Note potential hit to earnings from currency translation in 2009 if dollar remains strong. Maintained Buy rating.

U.S. Steel (X) estimates cut at Credit Suisse. Credit Suisse is lowering its 2009 EPS estimates on company to $7.79 from $10.44 based on lower steel spot price assumptions. Maintained Neutral rating and $66 target price.

Strategy Calls/Market Calls

Two insurance brokers upgraded at Citigroup. Brown & Brown (BRO) was upgraded from Hold to Buy. The rating on Arthur J. Gallagher (AJG) was raised from Sell to Hold, as pricing should improve heading into 2009. Aon (AOC) and Marsh & McLennan (MMC) remain the analyst's top picks.

Two chip-equipment stocks upgraded at Citigroup. Lam Research (LRCX) and ATMI (ATMI) were upgraded from Hold to Buy. Valuation call, as equipment stocks tend to bottom ahead of a utilization trough.

Citigroup changes ratings on two specialty chip stocks. National Semiconductor (NSM) was upgraded from Hold to Buy. On the other hand, Fairchild (FCS) was downgraded from Hold to Sell. Risk/reward looks more attractive at the current valuation.

Semiconductor sector upgraded at Citigroup to a Positive stance. A majority of the stocks are now rated Buy, as the risk/reward appears favorable, as it did during the 1990/1991 recession.