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Upgrades & Downgrades: Two Views on IBM


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

Stocks staggered to a split decision, the Dow dropping amid a widespread sell-off in financials even as Nasdaq gained for a seventh session in eight. Yesterday brought renewed signs China's economy is slowing more sharply than previously thought and our own trade deficit was announced at an annual rate of $564.3 billion, up 13% in a year. As for Europe, a surprise uptick in German wholesale prices brought back unwelcome echoes of the country's go-fly-a-kite days, when hyperinflation made it possible for 1920′s children to make tethered aircrafts out of worthless banknotes. JP Morgan Chase (JPM), an object of ire among the occupiers, did its best to appease protesters by only earning a billion bucks a month. Cleaning company Zep Inc. (ZEP) fell 15.87% for the Nasdaq's worst showing, this after it appeared their services would be required to mop up the mess in Zuccotti Park. This morning brought news the clean up is to be scrubbed. (Cleanliness is next to godliness after all and the demonstrators, whose views are as far away from the firm that does "God's work" as is possible, asked to remain in all their unwashed glory.)

In analyst action, Guess (GES) edged up 0.94% after being picked up by Bank of America-Merrill Lynch, proof that on Wall Street it's always either boom or bust. Grocer's daughter and iconic capitalist Margaret Thatcher turned 86, and promptly saw supermarket stock Kroger (KR) nixed at Jefferies, which reduced their rating to Hold from Buy. And Abby Joseph Cohen, Senior US Investment Strategist at Goldman Sachs (GS), appeared at the Museum of Finance -- an institution which itself could use some cold hard cash. Today in economics, analysts anticipate an increase in October's preliminary University of Michigan consumer semtiment survey at 9:55AM Eastern, and at 10:00AM August business inventories are expected to be unchanged. On the corporate front, quarterly earnings are expected out of Mattel (MAT), Pier 1 Imports (PIR), and Webster Financial (WBS).


International Business Machines (IBM): The key Dow component is begun with an Outperform and $210 price objective at Macquarie, which cites Big Blue's stable and defensive business model in addition to a still reasonable valuation.

Tech Stocks
: By contrast, ISI Group assigns IBM a less bullish Hold, along with Dell Inc (DELL), and Brocade Communications Systems (BRCD). It begins Buys on fellow Dow members Hewlett-Packard (HPQ) ($32 price target) and Cisco Systems (CSCO) ($20), along with Apple Inc (AAPL) ($500), EMC Corp (EMC) (29), Juniper Networks (JNPR) ($25), F5 Networks (FFIV) ($110), NetApp (NTAP) ($48), and VMware (VMW) ($110). See also Why HP's Pain Is Dell's Gain.

U.S Multi-Industry: Barclays begins Overweights on, among others, General Electric (GE) ($20 target price) and Honeywell (HON) ($69). Its Equal Weights include 3M Co. (MMM), Tyco (TYC), and Ingersoll Rand (IR).

Corn Products (CPO): CPO is a new Neutral at Goldman Sachs.

People's United Financial
(PBCT): The stock is picked up with a Hold at Jefferies.

Quest Software
(QSFT): QSFT is assigned a Hold rating and $20 target with Wunderlich.

Green Dot
(GDOT): GDOT gets initiated with an Outperform at JMP Securities.

(MRVL): Cowen & Company has a new Outperform on MRVL.

J.M. Smucker
(SJM): The stock is started with a Hold at Stifel Nicolaus.

Ariad Pharmaceuticals
(ARIA): ARIA is initiated with an Outperform at Rodman & Renshaw, whose target is $15.
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No positions in stocks mentioned.
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