The following ratings changes were generated on Wednesday, Oct. 22.

We've downgraded Adobe Systems, which offers creative, business and mobile software and services, from buy to hold. Strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and weak operating cash flow.

Adobe's revenue growth of 4.2% since the same quarter last year trails the industry average of 16.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share. Its debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.57, which clearly demonstrates the ability to cover short-term cash needs. The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization.

The company, on the basis of change in net income, which has decreased by 6.6%, from the same quarter one year ago, has significantly underperformed compared to the Software industry average, but is greater than that of the S&P 500. Shares have plunged by 40.38% compared with where it was selling one year ago, apparently dragged down by the decline we have seen in the S&P 500 along with other factors. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

We've upgraded biopharmaceutical company Gilead Sciences from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

The revenue growth since the same quarter a year ago of 29.5% came in higher than the industry average of 12.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share. The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Gilead's return on equity significantly exceeds that of both the industry average and the S&P 500. The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here.

It goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. Gilead has improved earnings per share by 23.8% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years, and we feel that this trend should continue. During the past fiscal year, Gilead turned its bottom line around by earning $1.68 vs. -$1.31 in the prior year. This year, the market expects an improvement in earnings to $2.04. The net income growth of 26.5% from the same quarter one year ago has significantly exceeded that of the S&P 500 and the biotechnology industry.

We've downgraded global specialty retailer Gap ( GPS) from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.

Gap reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year, and we feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Gap increased its bottom line by earning $1.09 vs. 97 cents in the prior year. This year, the market expects an improvement in earnings to $1.34. The net income growth of 50.6% from the same quarter one year ago has significantly exceeded that of the S&P 500 and the specialty retail industry. Gap's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.70 is somewhat weak and could be cause for future problems.

Net operating cash flow has declined marginally to $386.00 million, or 0.51% when compared with the same quarter last year. Despite a decrease in cash flow Gap is still fairing well by exceeding its industry average cash flow growth rate of -37.42%. Shares are down 24.74%, reflecting, in part, the market's overall decline, as well as investors ignoring the increase in its earnings per share. The fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.

We've downgraded Southern Copper ( PCU), an integrated producer of copper, molybdenum, zinc and silver, from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.14, which clearly demonstrates the ability to cover short-term cash needs. The gross profit margin is rather high at 62.30%, but it has managed to decrease from the same period last year. Net profit margin of 37.50% significantly outperformed against the industry.

The revenue fell significantly faster than the industry average of 75.6%. Since the same quarter one year prior, revenues fell by 20.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. The company, on the basis of change in net income, which decreased by 24.4% from the same quarter one year ago, has significantly underperformed compared to the metals and mining industry average but is greater than that of the S&P 500. Net operating cash flow has decreased to $404.77 million, or 37.64% when compared with the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

We've downgraded Western Union ( WU) from hold to sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

Western Union has improved earnings per share by 17.9% in the most recent quarter compared with the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year, and we feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Western Union increased its bottom line by earning $1.11 vs. 62 cents in the prior year. This year, the market expects an improvement in earnings to $1.32.

The net income growth of 11.3% from the same quarter one year ago has significantly exceeded that of the S&P 500 and the IT services industry. Since the same quarter one year prior, revenue slightly increased by 9.6%, but the company underperformed as compared with the industry average of 13.0%.

WU's share price is down 9.12%, reflecting, in part, the market's overall decline, as well as investors ignoring the increase in its earnings per share. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

Other ratings changes include Tellabs ( TLAB) and Mariner Energy ( ME), both downgraded from hold to sell.

All ratings changes generated on Oct. 22 are listed below.
Ticker Company
Current
Change
Previous
ABM ABM Industries
HOLD
Downgrade
BUY
ADBE Adobe Systems
HOLD
Downgrade
BUY
ADC Agree Realty
HOLD
Downgrade
BUY
AHCI Allied Healthcare
SELL
Downgrade
HOLD
AIRM Air Methods
HOLD
Downgrade
BUY
BUSE First Busey
BUY
Upgrade
HOLD
CHP C&D Technologies
SELL
Downgrade
HOLD
GILD Gilead Sciences
BUY
Upgrade
HOLD
GPS Gap
HOLD
Downgrade
BUY
HELE Helen of Troy
HOLD
Downgrade
BUY
HRS Harris
HOLD
Downgrade
BUY
ITRI Itron
HOLD
Downgrade
BUY
ITW Illinois Tool Works
HOLD
Downgrade
BUY
KIM Kimco Realty
HOLD
Downgrade
BUY
LBAI Lakeland Bancorp
HOLD
Downgrade
BUY
LXU LSB Industries
HOLD
Downgrade
BUY
MCRS Micros Systems
HOLD
Downgrade
BUY
ME Mariner Energy
SELL
Downgrade
HOLD
MMR McMoRan Exploration
HOLD
Downgrade
BUY
MTA Magyar Telekom
HOLD
Downgrade
BUY
NE Noble
HOLD
Downgrade
BUY
OB OneBeacon Insurance
SELL
Downgrade
HOLD
PAYX Paychex
HOLD
Downgrade
BUY
PCU Southern Copper
HOLD
Downgrade
BUY
PLT Plantronics
HOLD
Downgrade
BUY
PVH Phillips-Van Heusen
HOLD
Downgrade
BUY
ROCK Gibraltar Industries
HOLD
Downgrade
BUY
SHLM A. Schulman
HOLD
Downgrade
BUY
TGI Triumph Group
HOLD
Downgrade
BUY
TLAB Tellabs
SELL
Downgrade
HOLD
VMW VMware
SELL
Initiated
WDFC WD-40
HOLD
Downgrade
BUY
WGL WGL Holdings
HOLD
Downgrade
BUY
WU Western Union
SELL
Downgrade
HOLD
Source: TheStreet.com Ratings

Each business day, 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.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe a rating alone cannot tell the whole story, and that it should be part of an investor's overall research.
This article was written by a staff member of TheStreet.com Ratings.