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Upgrades & Downgrades: No Hollywood Ending for Netflix

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Wall Street ratings agencies set the tone for today's stock market.

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In movies it's 1929 all over again, with a silent film having just won Best Picture for the first time since that fateful year's fifth month. (Wall Street's old saw "Sell in May and go away" would have been especially apt advice back then.) In markets it's once more June 2008, just before a September swoon ushered in the worst financial crisis since the Crash. The S&P 500 Index (^GSPC) edged up only 0.33% in four holiday-shortened sessions but that increase, its seventh such advance in eight weeks, was enough to take it to a near four-year peak. LA-based David Beckham -- whose hitherto unlikely ambition to be taken seriously as an actor may actually come to pass if we really are returning to a pre-talkie era -- saw his Herbalife (HLF) jump 9.6% in hitting a new historic high. In a trading week that started on Fat Tuesday and ended with the 84th birthday of Fats Domino, Vivus (VVUS) surged 84.6% on high hopes for its diet drug. Gap Inc (GPS) -- whose now-defunct Forth And Towne division aimed at aging Baby Boomers had an especially unfortunate acronym for such an expanding demographic -- fell further 4.04% on Friday as an analyst downgrade followed iffy earnings.

Tom Brady, fresh from his Super Bowl loss, saw his wife warm up for watching the Academy Awards, aka the "Super Bowl For Women", by saying let-them-eat-cake. That presumably makes Mr. Brady the family's main breadwinner, which is a worry as the Ugg-endorsing quarterback had to endure his sponsor Deckers Outdoor (DECK) ending down 13.1%. Switching sports, breakout basketball star Jeremy Lin ditched the couch for an expensive new apartment although someone forgot to tell La-Z-Boy (LZB) - at a fresh peak in taking its twelve month increase to 45.33% - and indeed the National Association of Realtors, which just had to revise down existing home sales data in a sign the real estate recovery remains fitful. And Warren Buffett, who once dissed derivatives even as he invested in them, announced his firm's profit slid some 30% due to such "financial weapons of mass destruction." Today's earnings announcements are expected to include Armstrong World Industries (AWI), Career Education (CECO), Cooper Tire & Rubber (CTB), Lowe's (LOW), Priceline.com (PCLN), Universal Health Services (UHS), and Visteon (VC).


Initiations:

Dunkin Brands (DNKN): Shares are begun with a Buy at Citigroup.

Excel Trust (EXL): EXL is a new Equal Weight at Morgan Stanley.

United Rentals (URI): Citi starts Buy rated coverage on URI.

Northeast Utilities (NU): NU is resumed with a Buy recommendation and $45 price objective at Brean Murray based on a favorable future earnings outlook, expectations of expanding margins, and favorable expense trends.

Verisk Analytics (VRSK): The stock is assigned an Overweight at Evercore.


Upgrades:

Procter & Gamble (PG): The key Dow (^DJI) component is upgraded to Outperform from Market Perform by BMO Capital.

Walt Disney (DIS): The media and entertainment giant, also in the blue chip index, gets added to the Conviction Buy List at Goldman Sachs, sending shares up before the bell.

News Corp (NWSA): The media empire owned by Rupert Murdoch is upgraded to Buy from Neutral at Goldman.

American Electric (AEP): AEP is boosted to Buy from Hold at Jefferies.

Ariba (ARBA): The stock is added to Goldman's list of Conviction Buys.

American Campus Communities (ACC): ACC is upgraded to Buy from Hold with a $46 target at Argus, which says it is well positioned to benefit from growing university enrollment as increasing numbers of echo boomers enter college.

Discovery Communications (DISCA): The stock is now Neutral from Sell at Goldman.

Endo Pharmaceuticals (ENDP): ENDP is upgraded to Outperform from Neutral at Cowen & Company.

Extra Space Storage (EXR): Shares are hoisted to Buy from Hold at Jefferies.

Interpublic (IPG): The advertising giant gets upgraded to Buy from Hold at Deutsche Bank.

International Game Technology (IGT): IGT is named a long Research Tactical Idea at Morgan Stanley.

LaSalle Hotel Properties (LHO): Shares are increased to Outperform from Market Perform with Wells Fargo.

NetScout Systems (NTCT): NTCT is now Buy from Hold with at Wunderlich, whose target is $27.

Westlake Chemical (WLK): Shares are added to the Conviction Buy List at Goldman.

Tesco (TESO): The British grocer is taken to Buy from Neutral at Pritchard.

Telecom Italia (TI): TI is upgraded to Outperform at Exane BNP Paribas.

Tyco International (TYC): The stock is now Outperform from Neutral at Credit Suisse.


Downgrades:

Netflix (NFLX): Shares, now down for three straight weeks after a strong start to 2012, are downgraded to Underperform from Market Perform at Raymond James. The stock is losing more ground before the bell as a result.

MetroPCS (PCS) PCS is moved to Neutral from Outperform at Credit Suisse.

Viacom (VIAB): The MTV owner is downgraded to Neutral from Buy at Goldman.

Morgans Hotel Group (MHGC): The stock is cut to Market Perform at JMP Securities.

IAMGOLD (IAG): The commodity company gets cut to Neutral from Outperform at Macquarie

Iberdrola SA (IBDRY.PK): The Spanish energy giant is taken to Reduce from Neutral at Nomura.

Continental Resources (CLR): CLR is downgraded to Neutral from Buy with an objective of $100 at Robert W. Baird.

Digital Realty Trust (DLR): DLR is downgraded to Sector Perform from Outperform at RBC Capital.

NII Holdings (NIHD): Shares are now Underweight from Overweight at Barclays.

Oil services: Baker Hughes (BHI) is downgraded to Market Perform at Raymond James, which reduces rival Halliburton (HAL) to Outperform from Strong Buy.

Ventas (VTR): VTR is now Neutral from Buy at UBS.

Whiting Petroleum (WLL): The stock is lowered to Outperform from Buy at Crédit Agricole.
No positions in stocks mentioned.
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