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Upgrades & Downgrades: Abercrombie Is in a Bad Situation

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

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Mamma Mia, here we go again. Apologies to Björn & Co at ABBA for appropriating their song. After all, their native Sweden remains among the relatively prosperous Northern European periphery. However, given that the movie was filmed in Greece and its title is such a quintessentially Italian expression, it seems somehow appropriate. Shares slumped as intensified fears of continental contagion and an increase in oil above $100 a barrel for the first time since July outweighed accumulating evidence, yesterday in the form of October industrial production that America may actually be in marginally better shape than many imagine. For the markets life's indeed a Fitch as a ratings agency warned of rapidly dropping dominoes and Abercrombie (ANF) tumbled on 10 times normal volume to lead all S&P 500 laggards. More unwelcome news for the clothing company, coming so soon after being sued by Jersey Shore's The Situation. Seriously? As a fierce advocate of "G.T.L. baby. Gym, Tanning, Laundry," what more does he want after shares slimmed down some 13.64% in a single session, the apparel outfit being both burned and taken to the cleaners.

Chemed Corp (CHE) imploded 11.94%, a new low for the owner of Roto-Rooter sewer cleaners and an unwittingly exquisite commentary on the biggest municipal bankruptcy in U.S. history. Elsewhere Vitamin Shoppe (VSI) is in no position to buy an extra vowel, its fall of 3.67% following a lukewarm analyst initiation. 'E' is actually the most popular letter in the English language, though one wonders why. Especially after Dell Inc (DELL) dropped 3.20% on a revenue miss. (And as for Enron and the euro, we won't even go there.) Meanwhile Merrill resented making money for Bank of America (BAC) even as England's establishment took offense to Meryl making money. And shares in Saks Inc (SKS), fresh from Tuesday's 1.67% earnings-related advance, promptly slid 6.17% yesterday. Proof that, as an ass-backwards blonde on the bling king's escalator just discovered to her cost, what goes up must go viral. This morning in economics, the November Philadelphia Fed Index is out at 10:00 a.m. Eastern. On the corporate front Ahold, Dollar Tree (DLTR), Foot Locker (FL), Gap Inc (GPS), Intuit (INTU), J.M. Smucker (SJM), Marvell Technology (MRVL), Perry Ellis International (PERY), SABMiller, and Williams-Sonoma (WSM) are all due to announce earnings.


Initiations:

Telecom services sector: Jefferies has a Hold and $33 price target on Dow component AT&T Inc (T), and assigns an identical rating on Leap Wireless (LEAP) ($10 target.) Its Buys include Dow member Verizon (VZ) and MetroPCS (PCS), assigning respective price objectives of $45 and $12. Sprint Nextel (S) is started with an Underperform ($2.50 target). Also read Steve Jobs Planned on Taking Phone Companies Down.

Leisure stocks: HSBC Securities rolls out Neutral rated coverage on Royal Caribbean (RCL) ($30 target price), Carnival Corp (CCL) ($34), and Intercontinental Hotels Group (IHG).

TiVo Inc (TIVO): TIVO is a new Outperform at JMP Securities.

Volkswagen AG (VLKAY): The German car giant gets reinstated with an Outperform at Credit Suisse.

Progressive (PGR): Sanford Bernstein starts the insurance firm at Outperform.

Fairchild Semiconductor (FCS): Ticonderoga has a fresh Buy on FCS and establishes a price objective of $18. The company firm stands to benefit from robust secular growth trends in power chips.

Nxstage Medical (NXTM): NXTM is picked up at Overweight by Piper Jaffray.


Upgrades:

Lululemon Athletica (LULU): Shares are lifted to Buy from Hold with a $64 target at Stifel Nicolaus, which says the yoga firm can benefit from the thriving $40 billion global market for active use apparel.

American Tower (AMT): Goldman Sachs adds AMT to its list of Conviction Buys.

Micron Technology (MU): Oppenheimer takes the tech stock to Outperform from Perform and establishes an $8 objective. They expect shares to trade higher as the overhang of the Rambus (RMBS) lawsuit has been lifted.

Cadence Pharmaceuticals (CADX): The stock is upgraded to Perform from Underperform at Oppenheimer on account of a more attractive valuation.

Enbridge (ENB): The Canadian energy transportation company gets a Buy-from-Hold boost at TD Newcrest.


Downgrades:

Abercrombie & Fitch (ANF): Downgraded to Hold from Buy at ISI Group. For related content, see US Retail Sales Report Not Nearly as Bullish as It Seems.

Guess (GES): Shares get moved to Underperform from Neutral by Bank of America-Merrill Lynch.

Daimler AG (DDAIF): The luxury car outfit is lowered to Neutral from Outperform at Credit Suisse.

Bank of New York Mellon (BK): Shares are downgraded to Neutral from Buy at SunTrust.

Eaton Vance (EV): EV is now Neutral from Buy at Sterne Agee.

State Street (STT): STT gets a Neutral-from-Buy recommendation reduction at Suntrust.

Toronto-Dominion Bank (TD): Staying in the sector, Keefe Bruyette takes TD to Market Perform from Outperform.

Infineon (IFNNY): Shares are cut to Hold from Buy at Societe Generale and removed from Goldman's Pan Europe Conviction Buy List.

Rambus (RMBS): JPMorgan reduces its RMBS rating to Neutral from Overweight.

Marvell (MRVL): MRVL gets moved to Underperform from Market Perform at JMP Securities.

NetApp (NTAP): NTAP is cut to Neutral from Buy at Collins Stewart, which trims its target by $12 to $40. The broker has heightened concerns given two consecutive quarters of earnings misses.

Western Refining (WNR): Shares are downgraded to Hold from Buy at Deutsche Bank.

Marathon Petroleum (MPC): Morgan Stanley pulls MPC from its Best Ideas list.

Imperial Tobacco (ITYBY): The British based cigarette stock is now Reduce from Buy at Nomura.

Sally Beauty (SBH): Shares are cut to Equal Weight from Overweight by Barclays.

The Fresh Market (TFM): Piper Jaffray gives the grocer a Neutral-from-Overweight downgrade.


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