Monday's Analysts' Upgrades and Downgrades
CHANGE IN RATINGS
Aflac
(AFL) - Get AFLAC Incorporated Report
upgraded at Citigroup from Sell to Hold. $60 price target. Japan Post should reduce the risk of any near-term shortfall of sales. $60 price target.
Best Buy
(BBY) - Get Best Buy Co. Inc. Report
upgraded at Wachovia from Market Perform to Outperform. Visibility is improving for second half HDTV sales trends.
Citigroup
(C) - Get Citigroup Inc. Report
downgraded at Goldman Sachs to Sell from Neutral due to increasingly challenging operating environment stemming from dislocations in credit markets. Estimate company will incur $15 billion in CDO write-downs over next two quarters. Price target cut to $33 from $40.
Caterpillar
(CAT) - Get Caterpillar Inc. Report
upgraded at UBS to Neutral rating from Sell. Price target and FY 2008 eps estimates hold at $70 and $5.90, respectively.
Comverge
(COMV)
upgraded at Weisel from Market-weight to Overweight. Lower guidance and cancelled secondary have hurt the stock recently. Still, the fundamental business outlook remains positive. $36.50 price target.
Discover Financial Services
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(DFS) - Get Discover Financial Services Report
downgraded at Goldmanto Sell from Neutral. See reduced consumer spending as housing prices continue to fall. Also believe charge-off rate guidance (at or below 5%) is too low. Price target lowered to $16 from $26.
Echostar
(DISH) - Get DISH Network Corporation Report
upgraded at Citigroup from Hold to Buy. Valuation call, as there is a 65% chance that AT&T buys the company over the next year. $52 price target.
Eaton
(ETN) - Get Eaton Corporation PLC Report
upgraded at Keybanc from Hold to Buy. $105 price target. Slower domestic truck demand is already priced into the stock.
Fannie Mae
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downgraded at FBR from Outperform to Market Perform. Also removing from the Top Picks list. $35 price target, which represents 1.1 times book value. Concerns about credit losses should continue to pressure the stock.
Force Protection
(FRPT) - Get Freshpet Inc. Report
downgraded at Weisel from Overweight to Market-weight. Estimates also cut, to reflect a less aggressive Cheetah ramp. $17 price target.
Hormel
(HRL) - Get Hormel Foods Corporation Report
upgraded at JP Morgan to Neutral. Company should benefit from the steep drop in hog prices. Strategic initiatives should also reduce earnings volatility.
IDEX
(IEX) - Get IDEX Corporation Report
downgraded at Goldman Sachs to Sell from Neutral based on limited upside and lack of near-term catalysts. See organic growth slowing in 2008, with margins around 20%. Note high risk of missing Q4 estimates. Price target at $37.
Joy Global
(JOYG)
upgraded at Goldman Sachs to Neutral from Sell based on improving demand outlook. See mining equipment demand beginning to improve in US coal. Price target increased to $59 from $49.
Laboratory Corp
(LH) - Get Laboratory Corporation of America Holdings Report
upgraded at UBS to Buy rating from Neutral. Price target lifts to $80 from $79 and FY 2008 eps estimates upped to $4.71 from $4.63.
MSC Industrial
(MSM) - Get MSC Industrial Direct Company Inc. Report
downgraded at William Blair to Market Perform. Company likely to suffer from a slower macroeconomic environment, as 80% of sales are tied to the manufacturing sector.
Nymex
(NMX)
upgraded at Citigroup from Hold to Buy. $150 price target. Stock offers a compelling risk/reward, given the scarcity value of the company's trading platform.
Pitney Bowes
(PBI) - Get Pitney Bowes Inc. Report
upgraded at Merrill from Neutral to Buy. Estimates also raised, as the company's restructuring plans should lower costs enough to offset falling sales.
Qualcomm
(QCOM) - Get QUALCOMM Incorporated Report
upgraded at JP Morganfrom Neutral to Overweight. Strength in the QCT chip business should help re-accelerate earnings in 2009. WCDMA business is receiving little value at current prices.
Rohm and Haas
(ROH)
upgraded at Goldman Sachs to Buy from Neutral. Recent pullback has brought stock down to attractive valuation around 12.5 times 2008 earnings. Note global footprint and recent price hikes helping drive earnings growth. Price target at $64.
RBC Bearings
(ROLL) - Get RBC Bearings Incorporated Report
upgraded at Baird from Neutral to Outperform. $39 price target. Analyst day confirmed that the company should continue to benefit from the current upswing in the aerospace cycle.
Smithfield Foods
(SFD)
downgraded at JP Morgan from Overweight to Neutral. Lower hog prices should significantly weigh on earnings.
TESCO Corporation
(TESO)
coverage initiated at FBR with an Outperform rating and $37 target price.
Vasco Data
(VDSI)
upgraded at Friedman, Billings Ramsey from Market Perform to Outperform. Selloff in the stock appears overdone, and recent channel checks have been positive. Estimates also raised.
Vasco Data upgraded at FBRto an Outperform rating as fundamentals are intact amid sell-off.
Wellpoint
(WLP)
upgraded at Wachovia to Outperform. Company posted its best quarterly results in some time. Stock should outperform as management delivers 14% to 16% earnings growth next year.
Yahoo!
(YHOO)
upgraded at Merrill from Neutral to Buy. Stock is underperforming its peers once again in 2007, and page view growth is accelerating. $33 price target.
STOCK COMMENTS / EPS CHANGES
Dynegy
(DYN)
2007 estimates reduced at Credit Suisse to $0.20 from $0.26, according to Credit Suisse. Q3 recurring earnings came in below expectations due to weakness in West Coast results. Also note lowered company guidance on weaker commodity pricing. Maintained Neutral rating and $10 target.
eBay
target price cut at Deutsche Bank by $3 to $30. US weakness persisting as promotions fail to ramp up.
Con Edison
(ED) - Get Consolidated Edison Inc. Report
2007 estimates raised at Credit Suisseto $3.38 from $3.22 after management raised guidance. Maintained Neutral rating and $50 target.
FedEx
(FDX) - Get FedEx Corporation Report
price target cut at Credit Suisse: to $108 from $114 following negative preannouncement. Rising fuel and weak LTL environment continue to create headwinds for company. Maintained Neutral rating.
Woodward Governor
(WGOV)
2008 estimates raised at FBRby a nickel to $3.10 a share following strong Q4 results. Maintained Market Perform rating.
STRATEGY CALLS / MARKET CALLS
Citigroup changes sector ratings: The Bank sector was upgraded to Overweight. Valuation call, especially where secure dividends exist. Energy sector also downgraded to Market-weight, because of valuation. Healthcare Equipment and Services upgraded to Market-weight, despite an intimidating political backdrop.
