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Upgrades & Downgrades: Analyst Says Stay in Home Depot

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

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Say what you want about Kim Kardashian, the socialite certainly sets the trends. No sooner did she announce her quickfire separation than Filene's, a firm founded in 1881 and famous for its Running of the Brides, similarly called it quits. And rounding out an ominous week in equities, Europe came closer than ever before to concluding its Big Fat Greek Wedding is destined to end in divorce and the drachma. (To be fair the news wasn't all bad - Estée Lauder (EL), whose advertising always does its best to promote matrimonial bliss, surged some 16.30% in five sessions.) Ongoing economic angst across the Atlantic and a fuzzy final communiqué - precisely the sort of $10 word the continent can't afford - from the Group of 20 in France sent shares down for the first week in six, the S&P 500 Index sliding 2.48% to take it back into the red for 2011. While Athens is reduced to panhandling with a humble coffee cup - presumably the iconic Gotham version invented by the exquisitely named Mr. Buck - upscale Starbucks (SBUX) fared far better. Its 6.74% earnings-related increase on Friday sent shares to their highest level in history. Doubtless delighting the Occupy Wall Street crowd, who photographic evidence indicates can easily afford expensive lattes, the better to be wide awake while marching on Sleepless Seattle.

Elsewhere the jobless rate unexpectedly ticked down to 9.0% in October, John Corzine newly unemployed even as Kate Gosselin finally found productive work. And upstate New York still can't catch a break. Rochester's own Eastman Kodak (EK), whose stock has now shed 75.98% in a year, announced a $222 million quarterly loss. The company has long been a proponent of a 13-month year but time alas waits for no man and it finally ran out on Albany born man of the hour Andy Rooney. Today in economics, September consumer credit is out at 3:00 p.m. Eastern. Another busy week in third quarter earnings kicks off with Babcock & Wilcox (BWC), Dish Network (DISH), EchoStar (SATS), LoJack (LOJN), Louisiana Pacific (LPX), Priceline.com (PCLN), Quicksilver (KWK), Ryanair (RYAAY), Sysco (SYY), and WMS Industries (WMS) all due to report results.


Initiations:

Archer-Daniels-Midland (ADM): The agricultural commodity play is a new Neutral at Ticonderoga. Though this has historically been a reasonable investment entry point, the story lacks near-term catalysts to move the stock higher over the next several quarters.

VeriFone (PAY): Citigroup picks up PAY at a Buy.

Groupon (GRPN): Shares in the buzz worthy recent IPO are up before the opening bell after being begun with a Buy at The Benchmark Company, which assigns it a $32 target price. The broker believes GRPN has has pioneered an Internet commerce operating system for local businesses, and enjoys a dominant global position in the rapidly emerging new online segment of daily deals. See also Congratulations, Groupon, You've Silenced Your Critics -- For Now.

IAC/InterActiveCorp. (IACI): Needham has a new Hold on the Match.com owner. Although it enjoys the leading global market share in online personals, the recent Meetic acquisition should weigh on margins until the second half of 2012.

Pier 1 Imports (PIR): Wells Fargo rolls out Outperform rated coverage on the home furnishings firm.

Mylan Labs (MYL): Leerink Swann gives the generic drug maker a Market Perform rating.

Wright Express (WXS): Shares are initiated with a Neutral at Citigroup.

Financial Federal (FIF): Brokerage Robert W. Baird has a new Neutral on FIF and establishes a price objective of $22.


Upgrades:

Home Depot (HD): RBC Capital raises its recommendation on the Dow component to Outperform from Sector Perform. Also read Will These 5 Holiday Shopping Trends Save Retail Investors From a Blue Christmas?

Lumber Liquidators (LL): Goldman Sachs lifts LL to Buy from Neutral.

Fluor (FLR): Moving from flooring products to FLR, Lazard lifts the industrial outfit to Buy from Neutral.

CVS Caremark (CVS): CVS gets upgraded to Outperform from Sector Perform, also at RBC Capital.

Toll Brothers (TOL): Citigroup takes TOL to Buy from Neutral.

DragonWave (DRWI): Jefferies juices its DRWI rating to Buy from Hold.

Quest Diagnostics (DGX): Shares are increased to Outperform from Sector Perform at RBC Capital.

Eagle Rock Energy (EROC): Shares are moved to Outperform from Market Perform with Wells Fargo.


Downgrades:

Kellogg (K): The cereal stock is cut to Market Perform from Outperform by brokers William Blair.

Alcatel-Lucent (ALU): Citigroup cuts the French telecom firm, whose shares slid 17.03% on Friday, to Sell from Neutral this morning.

Amphenol (APH): Ticonderoga takes the tech name to Sell from Neutral and sets a $38 target price. Concerns include a lofty valuation relative to peers and a sluggish 2012 outlook for demand trends.

DR Horton (DHI): The home-builder is now Neutral from Buy at Citi.

Frontline (FRO): Deutsche Bank takes the tanker stock to Hold from Buy.

European banks: No relief in sight for the beleaguered sector this morning. Dutch financial giant ING Groep NV (ING) gets downgraded to Hold from Buy at Societe Generale, which slashes German competitor Commerzbank AG to Sell from Hold.

Smith & Nephew (SNN): Staying in Europe, the British based healthcare concern is now Neutral from Outperform at Credit Suisse.

Spectra Energy LP (SEP): Morgan Keegan lowers SEP to Market Perform from Outperform amid an absence of announced growth opportunities.

Sunpower (SPWRA): The alternative energy stock is now Sell from Hold at Auriga.

7 Days Group (SVN): Shares are cut to Hold from Buy at T.H. Capital due to an unfavorable valuation.

Veolia Environnement (VE): The French firm is moved to Underweight from Neutral at JPMorgan.

Vertex Pharmaceutics (VRTX): The stock gets downgraded to Sector Perform from Outperform at RBC Capital. For related content, see Vertex Shatters Sales Goal for Hepatitis Drug.


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No positions in stocks mentioned.
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