Securities brokerage and investment bank Paulson Capital ( PLCC) has been upgraded 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 the same period last year, and its debt-to-equity ratio of 0.00 implies very successful management of debt levels. The firm's gross profit margin of 46.7% is high, though it declined significantly from the same period a year ago. Despite the mixed results of the gross profit margin, its net profit margin of 28.6% significantly outperformed against the industry. Paulson Capital had been rated a sell since December 2006. Paragon Technologies ( PTG) provides systems, technologies, products and services for material flow applications. It has been downgraded to a sell from a hold. The company posted a net loss of $270,000 in the first quarter of 2007 after breaking even in the year-earlier period. Paragon's gross profit margin decreased during the same period to 26.5%, and its net profit margin of -7.4% is significantly below that of the industry average. The company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. Paragon's stock price has declined 26.8% over the past year, and based on its current price in relation to its earnings, is still more expensive than most of the other companies in its industry. The stock had been rated a hold since May 2007. TheStreet.com Ratings has initiated coverage of professional liability insurance provider Darwin Professional Underwriters ( DR) with a sell rating. The company's weaknesses are apparent in several areas, including its premium valuation and poor profit margins. Although Darwin's return on equity increased to 8.2% in the first quarter of 2007, it is still below that of both the industry and the S&P 500.