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Each weekday, Ratings updates itsratings on the stocks it covers. The proprietaryratings model projects a stock's total returnpotential over a 12-month period, including priceappreciation and dividends. Buy, hold or sell ratingsdesignate how the Ratings group expects these stocksto perform against a general benchmark of the equitiesmarket and interest rates.

While the ratings model is quantitative, it usesboth subjective and objective elements. For instance,subjective elements include expected equities marketreturns, future interest rates, implied industryoutlook and company earnings forecasts. Objectiveelements include volatility of past operating revenue,financial strength and company cash flows.

Freight forwarding services and logistics servicesprovider

Target Logistics


has beendowngraded to a hold from a buy. Its gross profitmargin of 30.1% in the third quarter of its fiscal2007 is lower than what is desirable, having decreasedfrom the same quarter in 2006. Also, the company's netprofit margin of 0.80% trails that of the industryaverage. Its return on equity of 7.5% in the samequarter was down from the year-earlier period and issignificantly below that of the industry average. Thecompany's stock price has declined 31.7% in the past12 months. Target Logistics had been rated a buysince February 2007.



providessoftware and related services for nonprofitorganizations. It has been downgraded to a hold froma buy. Even though the company has a strongdebt-to-equity ratio, the quick ratio of 0.42demonstrates an inability to pay short-termobligations. Net income increased by 3.5% in thefirst quarter of 2007 compared with the same periodone year ago, significantly underperforming the


and the software industry. While the companyhas seen its stock price increase 22.3% in the pastyear, there is currently no conclusive evidence thatwarrants the purchase or sale of this stock. Blackbaud had been rated a buy since January 2007.

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Securities brokerage and investment bank

Paulson Capital


has beenupgraded to a hold from a sell. Its revenue swung to a profit of $9.7 million in the first quarter of 2007 compared with a loss of $958,000 in thesame period last year, and its debt-to-equity ratio of0.00 implies very successful management of debtlevels. The firm's gross profit margin of 46.7% ishigh, though it declined significantly from the sameperiod a year ago. Despite the mixed results of thegross profit margin, its net profit margin of 28.6%significantly outperformed against the industry. Paulson Capital had been rated a sell since December2006.

Paragon Technologies


providessystems, technologies, products and services formaterial flow applications. It has been downgraded toa sell from a hold. The company posted a net loss of$270,000 in the first quarter of 2007 after breakingeven in the year-earlier period. Paragon's grossprofit margin decreased duringthe same period to 26.5%, and its net profit margin of-7.4% is significantly below that of theindustryaverage. The company has not demonstrated a cleartrend in earnings over the past two years, making itdifficult to accurately predict earnings for thecoming year. Paragon's stock price has declined 26.8%over the past year, and based on its current price inrelation to its earnings, is still more expensive thanmost of the other companies in its industry. Thestock hadbeen rated a hold since May 2007. Ratings has initiated coverage ofprofessional liability insurance provider

DarwinProfessional Underwriters


with a sellrating. The company's weaknesses are apparent inseveral areas, including its premium valuation andpoor profit margins. Although Darwin's return onequityincreased to 8.2% in the first quarter of 2007, it isstillbelow that of both the industry and the S&P500.