Brocade's

(BRCD)

news after the close Wednesday night that it

beat estimates, but that its second-quarter growth would be

modest, brought the analysts out to punish the company and its cohorts.

Merrill Lynch

lowered its second-quarter EPS view to 13 cents from 15 cents and 2001 EPS view to 60 cents from 67 cents and its price target to $65.

Still, Merrill said, "Although this news crystallized our worst concerns, the key elements of our bullish stance remain in place," which are that Brocade is working to become one of the killer hardware and software platforms in the data center and that SAN and fiber-channel demand remains strong and the market underestimated.

"While economic softness and uncertainty have led to very poor performance for everyone around Brocade, we think the time to buy great companies is when most lose hope. At a

PEG of 56 cents, we think that we're there, but do believe that patience will be rewarded."

The firm added that it believes the same for

EMC

(EMC)

,

Network Appliance

( NT) and

McData

( MCDT).

Also,

Morgan Stanley

downgraded Brocade to outperform from strong buy and EMC to neutral from strong buy.

Upgrades

Kerr-McGee

(KMG)

: UP to buy from hold at

UBS Warburg

.

Oxford Health

( OXHP): UP to strong buy from accumulate at

Prudential Securities

.

Schlumberger

(SLB) - Get Report

: UP to mid-term buy from accumulate at Merrill.

Too

(TOO) - Get Report

: UP to buy from hold at

Credit Suisse First Boston

.

Downgrades

ADC Telecommunications

( ADCT): price target DOWN to $25 from $30 at Lehman. Also, its 2001 earnings DOWN to 48 cents a share from 59 cents at

W.R. Hambrecht

.

Celeritek

(CLTK)

: 2002 EPS view DOWN to 11 cents from 55 cents at Prudential.

Conseco

(CNC) - Get Report

: DOWN to market perform from buy at Lehman.

Helmerich & Payne

(HP) - Get Report

: DOWN to outperform from buy at

Salomon Smith Barney

.

IMRglobal

(IMRS)

: DOWN to market perform from buy at Lehman.

Martha Stewart Living

(MSO)

: DOWN to hold from buy at CSFB.

Nortel Networks

(NT)

: 2001 EPS view DOWN to 72 cents from 81 cents at UBS; and 2002 EPS DOWN to 90 cents from $1. It also cut its price target to $27 from $30.

Portal Software

( PRSF): DOWN to hold from accumulate at Prudential; 2002 EPS cut to 12 cents from 23 cents.

Stanley Works

(SWK) - Get Report

: DOWN to hold from buy at CSFB (but see Initiations).

Stilwell Financial

( SV): DOWN to market perform from buy at Lehman.

Vicinity

(VCNT)

: price target DOWN to $6 from $15 at

J.P. Morgan

.

Initiations

Group Moves

J.P. Morgan started coverage of three drug store companies:

  • CVS (CVS) - Get Report: NEW buy; price target: $72.
  • Duane Reade (DRD) - Get Report: new long-term buy; price target: $36.
  • Walgreen (WAG) : NEW market perform; price target: $42.

Deutsche Banc Alex. Brown

started coverage on home products makers:

  • American Standard( ASD): NEW buy; price target: $65.
  • Black & Decker( BDK): NEW buy; price target: $55.
  • Dal-Tile (DTL) : NEW market perform.
  • Masco (MAS) - Get Report: NEW market perform; price target: $28.
  • Sherwin-Williams (SHW) - Get Report: NEW market perform.
  • Stanley Works (SWK) - Get Report: NEW market perform (but see Downgrades).

Alex. Brown started coverage of two electronic retailers: