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 were generated on Feb. 27.

HCP (HCP), a Maryland real estate investment trust that invests in health care related properties, has been upgraded to buy. For the fourth quarter, HCP posted revenue of $295.9 million, up 33% from the year-ago period. Earnings per share swung to a profit of 16 cents from a loss of 4 cents, and for 2008, the market predicts an improvement in full-year EPS to 88 cents, up from 67 cents in 2007. In addition, net operating cash flow has increased 32% year over year to $147.2 million. At 51%, the company's gross profit margin is rather high, but its net profit margin of 17% trails the industry average. HCP had been rated hold since Nov. 6.

Wal-Mart (WMT), an operator of retail stores, has been upgraded to buy. For the fourth quarter, revenue increased 8.4% year over year to $107.4 million, and EPS climbed 7.4% $1.02. For 2008, the market expects an EPS improvement to $3.40, vs. $3.16 in 2007. Return on equity has improved slightly from the year-ago quarter to 20%. This can be construed as a modest strength in the organization. With a price-to-earnings ratio (P/E) of 16.27, the company trades at a discount to others in the retail industry. Wal-Mart had been rated hold since May 16.

Shanda Interactive (SNDA), an operator of online games in China, has been upgraded to buy. For the fourth quarter, revenue leaped 78% to $107.5 million, and EPS rose to 64 cents from 42 cents over the same interval. With no debt to speak of, Shanda has a debt-to-equity ratio of zero, which we consider a favorable sign. The company also maintains a quick ratio of 3.19, indicating an ability to cover short-term cash needs.

The company's current return on equity greatly increased year over year, a signal of significant strength. Shares have surged by 40% over the past year. The stock is still cheap, however; it sports a P/E of 13.32. Shanda had been rated hold since Jan. 31.

ChoicePoint (CPS), which provides identification and credential verification services, has been upgraded to hold. Strengths such as revenue growth, strong return on equity and expanding profit margins are balanced by unimpressive net income growth, poor debt management and a premium valuation.

For the fourth quarter, ChoicePoint increased revenue 0.3% year over year to $239.4 million, and there was a loss of 39 cents compared with a profit of 41 cents a year ago. In contrast to the disappointing EPS performance, return on equity increased to 20% from 8.3% over the same period.

In addition, the market expects an improvement in full-year 2008 earnings per share to $1.80 vs. 81 cents. Net operating cash flow has decreased to $45.47 million, or 35.34% when compared with the same quarter last year. With a P/E of 59.28, the company's shares are much more expensive than those of others in its industry. ChoicePoint had been rated sell since Jan. 28.

KT (KTC), a provider of telecommunications services to Korea, has been upgraded to hold. Its strengths, which include notable return on equity, a reasonable valuation and expanding profit margins, are countered by feeble EPS growth and deteriorating net income. KTC's return on equity of 11% outperforms the industry average. The stock has risen significantly over the past year, outperforming the S&P 500. In spite of this rise, shares sport a P/E of 10.24, making the stock cheaper than others in its industry. On the other hand, EPS has declined to 9 cents from 62 cents year over year. For 2008, the market is expecting a 10% year-over-year EPS contraction to $2.20. KT had been rated sell since TheStreet.com Ratings initiated coverage on Feb. 24, 2006.

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.

Additional ratings changes from Feb. 27 are listed below.

Ticker	Company Name	Change	New Rating	Former Rating
CPS	CHOICEPOINT	Upgrade	Hold	Sell
HCP	HCP	Upgrade	Buy	Hold
JOUT	JOHNSON OUTDOORS	Downgrade	Hold	Buy
KTC	KT	Upgrade	Hold	Sell
PATR	PATRIOT TRANSN HOLDING	Downgrade	Hold	Buy
TRBR	TRAILER BRIDGE	Downgrade	Sell	Hold
WMT	WAL-MART STORES	Upgrade	Buy	Hold
WSBC	WESBANCO	Upgrade	Buy	Hold
SNDA	SHANDA INTERACTIVE-ADR	Upgrade	Buy	Hold
BBG	BILL BARRETT	Upgrade	Buy	Hold

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