CHANGE IN RATINGSAmerican Express ( AXP) downgraded at FBR to an Underperform rating as consumer credit deterioration is in early stage. American Express downgraded at Goldman Sachs to Neutral from Buy following preannouncement of negative Q4 earnings. Weaker credit trends in US lending portfolio, higher lending and charge card reserves, and slowing growth in worldwide Cardmember spending all contributed to shortfall. Price target cut to $55 from $81. Brown & Brown ( BRO) downgraded at Wachovia from Outperform to Market Perform. Estimates also cut because of margins pressures. Company also has exposure to weakening Florida market. Bear Stearns ( BSC) upgraded at Merrill from Neutral to Buy. $103 price target. Valuation call, as the stock is trading at an 8% discount to book value. Estimates still cut, to reflect a lower 10% ROE. Dyncorp International ( DCP) downgraded at CIBC from Outperform to Sector Perform. Valuation call, based on a $27 price target. DRS, BEAV and TGI offer better values at current levels. Dell ( DELL) upgraded at JP Morgan from Neutral to Overweight. Earnings expectations have become more reasonable, but the overall investor sentiment now appears too bearish. Stock is trading at just 14 times earnings, or a 21% discount to the group. D&B ( DNB) upgraded at JP Morgan from Neutral to Overweight. Company is a defensive name, with few cyclical levers and should continue to generate steady free cash flow.
STOCK COMMENTS / EPS CHANGESApache Corporation ( APA) target price raised at Deutsche Bank from $103 to $114 to reflect higher mid-cycle oil and gas price assumptions. Maintained Hold rating. Eastman Chemical ( EMN) 2007 estimates raised at Morgan Stanley to $4.89 a share. Company is seeing better raw material and energy cost recovery, and well as lower operating expenses. Overweight rating and $80 price target.
GameStop ( GME) 2008 estimates raised at Goldman to $1.79 from $1.73 based on solid holiday sales. Note same store sales growth of 20% but decelerating hardware and software sales. Maintained Neutral rating and $57 target.Hewlett-Packard ( HPQ) added to Focus List at JP Morgan. $55 price target. Pullback creates an attractive entry point. Current sentiment is overly bearish, versus the PC growth outlook. Printer growth remains strong. Overweight rating. SNDK also removed from the list. Healthways ( HWAY) target price raised at FBR to $81 to reflect higher multiple on earnings. IHS ( IHS) price target raised at Goldman to $70 from $67 based on strong Q4 results. Note strength across all metrics, including sharp margin improvement. Maintained Buy rating. NCR ( NCR) estimates raised at Morgan Stanley to $1.38 a share. Company raised guidance, though could still be affected by lower retail/financial orders and a US recession. Maintain Equal-weight rating. Shuffle Master ( SHFL) 2008 estimates cut at Deutsche Bank by 6 cents to 40 cents a share following Q4 results. Maintained Hold rating.