Each weekday, 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.

Investment bank Merrill Lynch ( MER) has been downgraded to hold from buy. The company shows mixed results in its recent quarter. Its revenue growth of 42.5% in the second quarter of 2007 compared with the same period last year exceeded the industry average of 3.5%, helping EPS increase by 37.4% in the same timeframe.

As a counter to these strengths, the company has not been very careful in managing its balance sheet. Its stock price declined 16.48% in the second quarter, and although it has been up 6.26% in the last 12 months, there is currently no conclusive evidence that warrants the purchase or sale of this stock. Merrill Lynch had been rated a buy since March 2006.

Aegon ( AEG), which provides life insurance, pensions, savings and investment products, has been downgraded to hold from buy. The company has seen its stock price increase 6.22% over the past 12 months, and it displays attractive valuation levels.

But it shows some weaknesses. Its revenue declined by 2.4% in the first quarter, compared with the same period last year, and its net income has significantly underperformed that of the insurance industry. It decreased 15.2% during the quarter compared with the same time last year. Aegon's return on equity decreased slightly during the quarter, compared with last year's timeframe, implying a minor weakness in the organization. It had been rated a buy since May 2007.

Clothing retailer Chico's FAS ( CHS) has been downgraded to a hold from a buy. The clothing retailer's recent initiative to increase direct sales and expand its store base could be a revenue-driver. Chico's has plans to upgrade hardware and software, in connection with upgrading its Web site to enhance direct-to-consumer sales.

However, TheStreet.com Ratings is concerned about Chico's poor merchandise mix, as lack of casual wear and an inappropriate color mix caused a 1.6% drop in same-store sales in the first quarter despite a 16% increase in revenue compared with the same period last year. While the company has been expanding its store floor space, it has not significantly increased its apparel lineup to fill its large floor space. As a result, it expects margin pressure to continue through the third quarter of fiscal 2007. Chico's had been rated a buy since June 2007.

Chipotle Mexican Grill ( CMG), a chain of eponymous fast-food casual Mexican restaurants, has been upgraded to hold from sell. The company's revenue grew 26.6% in the first quarter of 2007, compared with the same period last year, outpacing the industry average of 15.3%. It shows a debt-to-equity ratio of 0.01, suggesting very successful management of debt levels.

Chipotle's stock price has surged by 59.98% during the past 12 months, though its sharp appreciation has driven it to a price level that is relatively expensive compared to the rest of its industry. At this time, its upside potential is not good enough to warrant further investment at this time. Chipotle had been rated a sell since TheStreet.com Ratings initiated its coverage of the stock in February 2007.

Japanese imaging and information products company Fujifilm Holdings ( FUJI) has been downgraded to hold from buy. The company made significant progress in implementing its five-year Vision75 medium-term management plan, which it adopted in 2005 to expand fast-growing businesses that include medical imaging, flat-panel-display materials and graphic arts businesses. Its revenue increased by 4.3% in fiscal 2007, due to higher revenue from its information solutions and document solutions divisions and a weaker yen.

Risks to Fujifilm's hold rating include fluctuations in currency rates (more than half of its revenue comes from overseas markets), higher commodity prices, rapidly changing technology and increasing competition.

Additional ratings changes are listed below.

Company Name Ticker Change New Rating Former Rating
Aegon NV AEG Downgrade Hold Buy
Advocat AVCA Downgrade Hold Buy
Build-A-Bear Workshop BBW Downgrade Sell Hold
Chico's FAS CHS Downgrade Hold Buy
ClickSoftware Technologies CKSW Upgrade Buy Hold
Chipotle Mexican Grill CMG Upgrade Hold Sell
Ethan Allen Interiors ETH Upgrade Buy Hold
Fujifilm Holdings FUJI Downgrade Hold Buy
GFI Group GFIG Upgrade Buy Hold
Hoku Scientific HOKU Downgrade Sell Hold
Interface IFSIA Upgrade Buy Hold
Loopnet LOOP Initiation Sell n/a
Merrill Lynch MER Downgrade Hold Buy
Navigant Consulting NCI Downgrade Hold Buy
Nuvasive NUVA Upgrade Hold Sell
Northwest Bancorp NWSB Upgrade Buy Hold
Select Comfort SCSS Downgrade Hold Buy
SonicWall SNWL Upgrade Buy Hold
Steiner Leisure STNR Downgrade Hold Buy
Union Bankshares UBSH Downgrade Hold Buy
Zoll Medical ZOLL Upgrade Buy Hold
Source: TheStreet.com Ratings.