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Upgrades & Downgrades: Finding Value in Costco


Maybe the experts know something we don't know.

Ben Bernanke can expect to take home more Ben Franklins as Obama is about to nominate the Fed chairman for a second term. Stocks ended mixed yesterday, though the Dow gained for a fifth successive session. Oil, having doubled since February, is at an '09 high. Expect earnings out of Big Lots (BIG), Borders (BGP), Burger King (BKC), Chico's FAS (CHS), Corinthian Colleges (COCO), Hain Celestial (HAIN), Medtronic (MDT), Myriad Genetics (MYGN), Staples (SPLS) and -- appropriately -- Tuesday Morning (TUES). August consumer confidence is reported at 10:00AM Eastern. The Treasury sells $42 billion in two-year notes. And authorities are again interested in equity analysts...


Credit Cards
: Jefferies is giving both MasterCard (MA) and Visa (V) ample credit, initiating each with Buys and respective price objectives of $240 and $80. Mastercard's transaction growth is seen gaining on an increase in debit share. Vis-à-vis Visa, Jefferies sees it as the best positioned play in the payments industry.

Time Warner (TWX): Wells Fargo research picks up coverage of cable company Time Warner with an Outperform rating

Coinstar (CSTR): Coinstar could go ka-ching with Thomas Weisel assuming it with an Overweight.


(DEO): British based drinks darling Diageo had its spirits lifted, literally, at Bernstein as the broker upgraded the shares to Outperform from Market Perform. Analysts anticipate next Thursday's second half results will mark a bottom, and anticipate more favorable FX rates in fiscal 2010.

Siemens (SI): Also across the sea, engineering outfit Siemens saw its rating raised (Buy from Neutral) at Merrill Lynch on restructuring opportunities at the German giant.

GOL Linhas Aéreas Inteligentes S.A. (GOL): Low cost carrier GOL Linhas Areas Inteligentes S.A. scores an 180 degree upgrade at Argus (Buy from Sell), which sets a $17 price objective on Brazil's biggest airline.

Costco (COST): Costco stock may cost you more after William Blair boosted it to Market Perform from Underperform. Stabilizing business trends and a more reasonable valuation are among the factors cited.

Google (GOOG): Google gets an upgrade (to Buy from Source of Funds) at ThinkEquity, which also takes its price target up a tidy $150 to $550. Shares are expected to outperform as the economic cycle improves.

Lowe's (LOW): Home improvement retailer Lowe's could head higher following a rating reset (Overweight from Equal-weight) from Morgan Stanley, which established a $24 price target. See Three Reasons Lowe's Could Move High.


Sherwin-Williams (SHW): Coatings company Sherwin-Williams will find it tougher to paint the town red in light of a downgrade at Morgan Stanley (Equal-weight from Overweight).

BlackRock (BLK): BlackRock CEO Larry Fink may be in a funk after Pali lowered its rating on the investment company to Neutral from Buy.

Southern Copper (PCU): Shares of Southern Copper might indeed head south after HSBC cut it to Underweight from Neutral, while intriguingly also raising its price objective to $21.50 from $19.50.
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