Stock Upgrades, Downgrades From TheStreet.com Ratings

Each business day, 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.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.

The following ratings changes are from Feb. 5.

Lehman Brothers (LEH Quote - Cramer on LEH - Stock Picks), an investment bank, has been upgraded to buy. Lehman has strong revenue growth, an attractive valuation, expanding profit margins, good cash flow from operations and notable return on equity. These strengths outweigh the company's poor debt management.

The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Capital Markets industry average. The net income has decreased by 11.8% when compared to the same quarter one year ago, dropping from $1,004.00 million to $886.00 million.

Lehman's gross profit margin is very high at 79.90% and has increased from the same quarter the previous year. Additionally, the company's net profit margin of 6.00% is above the industry average.

Despite an increase in cash flow, Lehman's average is still marginally south of the industry average growth rate of 84.52%. Lehman Brothers had been rated hold since Oct. 12, 2007.

Gold Fields (GFI Quote - Cramer on GFI - Stock Picks), a South African gold miner, has been upgraded to buy on the strength of its growth in net income, EPS and revenue, a solid financial position and expanding profit margins.

For the second quarter of its fiscal 2008, Gold Fields posted income of $281.1 million, or 40 cents a share, vs. $104 million, or 21 cents a share, a year ago. The company has demonstrated a pattern of EPS growth over the past two years, and this trend should continue.

Gold Fields' debt-to-equity ratio is very low at 0.17 and is lower than the industry average, implying successful management of debt levels.

The company has a strong gross profit margin of 36%, but has decreased over the past year. Its net profit margin of 35% significantly outperformed the industry average. Gold Fields had been rated hold since Dec. 17, 2007.

American Reprographics (ARP Quote - Cramer on ARP - Stock Picks), a provider of document management services, has been upgraded to hold. The company displays robust revenue growth, notable return on equity and attractive valuation levels. Weaknesses include poor debt management, weak operating cash flow and a disappointing stock performance.

American Reprographics' strong revenue growth has not resulted in significant EPS growth.

Return on equity has improved over the past year and exceeds the industry average. At 45.80% the company's gross profit margin is strong, and its net profit margin exceeds the industry average.

With a debt-to-equitiy ratio of 1.45, American Reprographics could manage debt more effectively. Furthermore, its quick ratio of 0.69 means the company will not be able to cover short-term liquidity needs. Net operating cash flow has decreased 14.66% to $25.76 million year over year and is lower than the industry average. American Reprographics had been rated sell since Oct. 4, 2007.

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