Stock Upgrades, Downgrades From TheStreet.com Ratings

Each weekday, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.

While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.

Baldwin & Lyons(BWINB Quote), an insurance company, has been upgraded to buy. The company has a largely solid financial position and its stock price has appreciated over the past year. These strengths are expected to outweigh the company's subpar growth in net income. Baldwin & Lyons recently said that, including investment gains, second-quarter net income totaled $14.8 million, or 98 cents a share, compared with $5.4 million, or 36 cents a share, from a year ago. Net premium earned by the company's insurance subsidiaries increased 6.3% to $44.8 million. The company had been rated hold since May.

Cephalon(CEPH Quote), a biotechnology company, has been downgraded to hold. The company has reported revenue growth, has reasonable valuation levels and good cash flow from operations. However, net income growth has been unimpressive, debt management has been poor and return on equity has been disappointing. Cephalon recently swung to a second-quarter loss of $4.3 million, or 6 cents a share, compared with earnings of $50.4 million, or 76 cents a share, a year earlier. Excluding a settlement charge, the company said it earned $1.14 a share. Revenue edged up slightly to $447.2 million from $440.1 million. The company had been rated hold since May.