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.

AnnTaylor Stores(ANN Quote), a women's apparel retailer, has been downgraded to hold. While the company enjoys a solid financial position and revenue growth, it is also marked by weak operating cash flow, a generally disappointing performance in the stock itself and unimpressive growth in net income.

In May, AnnTaylor said first-quarter profit fell 19% to $31.5 million, or 47 cents a share, while revenue rose 4% to $580.3 million. More recently the company reported that same-store sales, or sales open at least a year, fell 8.4% in June. AnnTaylor had been rated buy since August 2005.

Book retailer Borders Group(BGP Quote) has been downgraded to sell. The company has been burdened by deteriorating net income, generally weak debt management, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

In May, Borders Group posted a larger-than-expected first-quarter loss of $35.9 million, or 61 cents a share, compared with a loss of $20.2 million, or 31 cents a share, a year earlier. Sales increased 2% to $886 million. Borders said the sales environment "was more challenging than we anticipated." The company had been rated hold since May 2006.