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.

Allied Capital(ALD Quote), a principal investment firm, has been downgraded to hold. While the company maintains a largely solid financial position with reasonable debt levels, revenue growth and expanding profit margins, it is also struggling with feeble earnings per share growth and deteriorating net income. The company swung to a third-quarter loss of $96.5 million, or 62 cents a share, compared with a profit of $77.9 million, or 53 cents a share, a year ago. EPS has declined over the last two years and this is expected to continue in the coming year. Revenue slightly increased 4.4%, trailing the industry average of 29%. Allied Capital had been rated hold since November 2005.

Health Net(HNT Quote) has been downgraded to hold after the managed health care company swung to a third-quarter loss of $103.8 million, or 93 cents a share, down from earnings of $90.9 million, or 76 cents a share, a year ago. Revenue increased 11.8% to $3.63 billion. The results include $216 million in costs to settle three class action lawsuits. TheStreet.com Ratings remains positive on the company's top-line performance and strong fundamentals. Total debt decreased by 20.4% to $398.02 million and HealthNet's cash balance was higher at $2.17 billion. Management expects this strong financial position to provide the flexibility to raise additional funds for future expansion plans. Health Net had been rated buy since November 2005.