Change in Ratings Ann Taylor ( ANN) upgraded at Goldman Sachs to Neutral from Sell based on valuation. Note that shares trade at three times 2009 EBITDA estimate, limiting major additional downside potential. Price target cut to $16 from $21. Barnes & Noble ( BKS) downgraded at Goldman Sachs to Sell from Neutral based on recent outperformance in share price and expected estimate cuts in weakening environment. Price target trimmed to $24 from $28. Church & Dwight ( CHD) upgraded at UBS to Buy from Neutral. Maintains 2008 EPS estimates of $2.85 and $64 price target. Chipotle ( CMG) downgraded to Underperform from Neutral at Merrill Lynch. Price target reduced to $51 from $63. 2008 EPS reduced to $2.36 and 2009 EPS to $2.75. Downgrade based upon continued deterioration of consumer landscape. Dow Chemical ( DOW) downgraded at J.P.Morgan to Neutral from Overweight based on near-term earnings risk and headwinds to growth potential from Rohm & Haas ( ROH) acquisition. Believe acquisition synergies will be delayed in contracting demand environment. Note lower near-term earnings due to outages caused by Hurricanes Gustav and Ike. Brinker ( EAT) upgraded at Goldman Sachs to Neutral from Sell based on balanced risk-reward following recent selloff. Believe management has capitulated on company's earnings outlook over the next year. Price target at $13. GameStop ( GME) upgraded at Piper Jaffray to Buy from Neutral based on valuation and fundamentals. Note that shares trade around 10 times 2009 earnings estimates despite earnings growth of 40% in 2008 and 18% in 2009. Price target lowered to $35 from $50.
Hovnanian ( HOV) upgraded to Neutral from Underperform at Credit Suisse and price target reduced to $6 from $6.40. 2009 loss estimate reduced to a loss of $4.50 a share from a loss of $3.30. Analyst stress test, which includes higher impairment charges and weak orders, yields 15% upside to shares. Infosys Technologies ( INFY) numbers lowered at Jefferies. Price target lowered to $35 from $57. Fiscal 2009 EPS estimates lowered to $2.24 from $2.32. Maintains Buy rating. Jack in the Box ( JBX) upgraded to a Buy at Merrill Lynch. Price target reduced to $21 from $26. Estimates exclude potential gains on asset sales. Analyst believes that despite macro headwinds, guidance is achievable and discount multiple provides upside to shares. J. Crew ( JCG) downgraded at Goldman Sachs to Sell from Neutral. See increased sales risk given aspirational/regional positioning and heavy inventory levels. See additional room for multiple contraction. Price target lowered to $19 from $29. Manpower ( MAN) upgraded at Deutsche Bank to Hold from Sell based on valuation. Note that shares trade around 10 times trough earnings, and see limited potential for return to 2001 EBIT levels if current cycle is much worse than last. Price target at $28. M.D.C. Holdings ( MDC) upgraded at Credit Suisse to Outperform from Neutral, and price target reduced to $36 from $41. Analyst believes company has a strong balance sheet and 18% stock price upside. Meritage ( MTH) upgraded at Credit Suisse to Neutral from Outperform, and price target reduced to $15 from $16. Analyst believes that after incorporating higher impairment charges and weak orders, shares offer a 7% upside.
Rockwell Automation ( ROK) upgraded to Neutral from Underperform at Merrill Lynch, and price target reduced to $30 from $40. Merrill believes cyclical names like Rockwell are valued at higher multiples than 7 times, and Rockwell has a particularly strong balance sheet and relatively high average cycle returns. Ryland Group ( RYL) downgraded to Neutral from Outperform at Credit Suisse, and price target reduced to $19 from $28. Higher impairment charges and weak orders take 2008 loss down to $8.65 a share from $7.45 and 2009 loss to $3.95 from 50 cents. Sonic ( SONC) downgraded at Goldman Sachs to Sell from Neutral due to concerns over franchisees' access to financing and expected weakness in same-store sales. Note company's high reliance on franchisees for growth. Price target cut to $13 from $17. St. Jude Medical ( STJ) upgraded at J.P.Morgan to Overweight from Neutral. Note earnings visibility, lack of exposure to financial crisis and attractive valuation below long-term growth rate. Toll Brothers ( TOL) downgraded to Underperform from Neutral at Credit Suisse and price target reduced to $19 from $24. Sees order trends grim over the next few quarters. TriMas ( TRS) downgraded to Underperform from Neutral at Merrill Lynch and price target lowered to $5 from $7.50. 2009 EPS reduced to 72 cents from 92 cents, and 2010 EPS reduced to 82 cents from $1.22. Believes business profile is one of the most exposed to a global recession and believes quality of earnings appears to be deteriorating. Urban Outfitters ( URBN) upgraded at Jefferies to Buy from Hold. Maintains 2008 EPS estimates of $1.34 and $33 price target.
Valero ( VLO) downgrade at Deutsche Bank based on weakening demand and expected tightening of heavy-light spreads. Note low valuation, but see larger upside in other names, including Marathon ( MRO) and Frontier ( FTO). Stock Comments/EPS Changes Cisco Systems ( CSCO) numbers lowered at Jefferies. Fiscal 2009 EPS estimates lowered to $1.65 from $1.70. Price target lowered to $24 from $30. Maintains Buy rating. Coca-Cola ( KO) numbers lowered at UBS. 2008 EPS estimates lowered to $3.23 from $3.29. Price target lowered to $64 from $66. Maintains Buy rating.