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Upgrades & Downgrades: IAC/InterActiveCorp Has Met Its Match

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

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Boosted by window dressing as we said curtains to the second quarter, stocks ended June by posting their best four-session winning streak since September. Industrials lead the way with investors cheered by an unexpected uptick in the Chicago Purchasing Managers Index and Greece's approval of a second austerity bill. Luxottica Group (LUX) gained 2.23% on the day its executives officially brought first half-trading on the NYSE to a close. Its expensive Oakley sunglasses allowed Chile's heroic miners to emerge from the abyss of course, but the abiding image of recent days remains the eye-wear employed by CNBC's Michelle Caruso-Cabrera to fight off tear gas in Athens. Anyone who thinks that country's problems are all suddenly solved is ill-advisedly choosing to wear rose-tinted spectacles. In an otherwise strong session for shares, there were still some surprising losers. Callaway Golf (ELY), buffeted by a CEO resignation and iffy earnings outlook, ended 1.74% lower - although some in the sport still managed to get high. Charlotte-based Bank of America (BAC) dropped 1.62% to lead Dow laggards and near neighbor Carolina Bank Holdings (CLBH) cratered 13.56%. Still, the region shouldn't worry, for lightening surely won't strike twice.

The conclusion of Q2 concurrently brought an end to QE2, the Fed's money-printing machine so loathed by a noted financial guru named Lindsay. (That would be Lindsay Lohan, not ex-National Economic Council leader Lawrence Lindsey.) And hard on the heels of The Social Network screenwriter Aaron Sorkin quitting Facebook, its star Justin Timberlake just invested in rival MySpace; with friends like these, Zuck doesn't need enemies. Trading today is expected to be anemic ahead of the long weekend, so if any acquaintances with too much time on their hands email you claiming that July 2011 has 5 Fridays, 5 Saturdays and 5 Sundays for the first time in 823 years, be sure to debunk it as a hoax. The age-old tradition of burying bad news on a Friday remains alive and well, however, as we shall shortly see from the disproportionately high ratio of downgrades to upgrades this morning. In economics, the final figure for June's Michigan Consumer Sentiment survey is expected to increase at 9:55 a.m. Eastern, and a fall is forecast for last month's ISM Index at 10:00 a.m.


INITIATIONS

Foot Locker (FL): FL is a fresh Outperform at BMO Capital, which assigns it a price objective of $25.

AMC Networks (AMCX) is begun with an Underweight by Barclays Capital.

TriQuint Semiconductor (TQNT): UBS has a new Neutral on TQNT.

Marathon Petroleum (MPC): MPC is begun with a Buy at Deutsche Bank and an Outperform and $55 price target at Credit Suisse.

Linn Energy (LINE): LINE is launched at a Buy at Wunderlich Securities.

Calix Networks (CALX) Morgan Keegan covers CALX at Market Perform - $22 target. The demand for higher capacity network connections, along with a government stimulus program, should fuel long-term spending.

Southern Copper (SCCO): SCCO gets picked up at a Neutral by Goldman Sachs.

Polypore International (PPO): PPO is begun with a Buy rating and $80 objective at Capstone.

First Pactrust Bancorp (FPTB) and First California Financial Group (FCAL): Sterne Agee starts Buys on both FPTB and small cap stock FCAL, with respective price objectives of $18 and $4.50.

Sonus Networks (SONS): SONS is a new Hold at Capstone.

Digi International (DIGI): DIGI is picked up at Overweight by Piper Jaffray.


UPGRADES


International Speedway (ISCA): ISCA is upgraded to Outperform from Underperform at Raymond James, which has a $35 target.

Murphy Oil (MUR): MUR is moved to Neutral from Underperform at JPMorgan.

NetApp (NTAP): NTAP is now Outperform from Market Perform at Atlantic Equities.

Westpac Banking Corp (WBK): UBS boosts WBK to Buy from Hold.


DOWNGRADES

General Mills (GIS): Cereal giant GIS gets cut to Hold from Buy at Argus following fiscal 2012 EPS guidance which was below estimates on weak volume and double-digit cost inflation.

Advisory Board (ABCO): ABCO is downgraded to Hold from Buy at Deutsche Bank.

Biomimetic Therapeutics (BMTI): BMTI is now Neutral from Buy at JPMorgan.

IAC/InterActiveCorp (IACI): Match.com owner IACI is cut to Neutral from Buy at Bank of America-Merrill Lynch, mainly on valuation with its shares already up 33% year-to-date.

CGGVeritas (CGV): CGV is reduced to Neutral from Buy at Goldman.

Central European Media (CETV): Goldman also reduces its rating on CETV to Sell from Neutral.

ServiceSource (SREV): Capstone Investments cuts SREV to Sell from Hold, with a $14 target.

Riverbed Technology (RVBD) is reduced to Neutral from Buy at SunTrust Robinson Humphrey.
No positions in stocks mentioned.
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