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Upgrades & Downgrades: Starbucks Worth More Bucks


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

Moore's Law, meet Murphy's Law. On the day Google's (GOOG) doodle honored the 84th birthday of Intel's (INTC) co-founder, the semiconductor stock slumped 4.04% after issuing a revenue warning, taking the Dow ($DJI) down with it. (Presumably it was all a marvelously Machiavellian plot by Scooter, that anti-capitalist member of The Muppets who is employed by the Internet search giant in the current movie.) Edvard Munch, the Norwegian painter also born yesterday, may have been a better choice of honoree in light of the market's foul mood; certainly a downgrade of Norwegian oil giant Statoil ASA (STO) sent its shares sliding 4.09% on a day investors everywhere wanted to Scream. To paraphrase Karen Carpenter, Rainy days and Moody's brought stocks down on Monday, the agency adding to the angst by saying it will review its ratings of all European Union countries. Financials fared worst amid heavy losses in light trading, with a bank run in Latvia only amplifying the anxiety. Since joining the European Union, this Baltic nation has become the party capital of the continent for boozy Brit bachelors, so Prime Minister David Cameron can't really claim that closer integration has done nothing for his country.

Indeed the laugh was on England's increasingly isolated leader yesterday, after Cameron International (CAM) imploded 5.56% in a weak energy sector. At least running on banks keeps the calories at bay; on a day McDonald's (MCD), up 8,000% since 1980, topped the Dow in making another new all-time high, us Americans are alas unable to say the same. Intel apart, it was a bad day for chips all round with Diamond Foods (DMND), attempting to own Pringles, dropping 22.83% to post the Russell 2000's poorest performance. And Bank of America (BAC) retreated a further 4.72%, the worst blue chip on the day as it has been all year. That "geezer bandit" who just robbed one of its branches really should show some sympathy and pick on someone his own size. Today in economics, all eyes are on the FOMC's final interest rate decision of the year at 2:15 p.m. Eastern. On the earnings front ABM Industries (ABM), Best Buy (BBY), FactSet Research (FDS), Learning Tree International (LTRE), and Pantry (PTRY) are all due to report results.


Boeing (BA): Lazard launches Buy rated coverage on the key Dow component, establishing an $84 price objective. The stock is trading higher ahead of the open as a result. (AMZN): Shares are a new Neutral at Goldman Sachs.

Specialty Eateries: Jefferies begins Buys on Starbucks (SBUX) ($50 price objective), Dunkin Brands (DNKN) ($30), Peet's Coffee & Tea (PEET) ($68), Einstein Noah Restaurant Group (BAGL) ($17), and Panera Bread (PNRA) ($165).

Credit Services: Visa (V) and MasterCard (MA) are both begun with Buys at Nomura, which has new Neutrals on Cash America International (CSH) and Western Union (WU). Also read Three Stocks That Show 'It's the Earnings, Stupid'.

Discount retailers: FBR Capital establishes Outperforms on Dollar General (DG), Ross Stores (ROST), and TJX Companies (TJX) and assigns fresh Market Performs on Fred's, Inc (FRED) and Dollar Tree (DLTR).

Energy sector: Robert W. Baird resumes Outperforms on Apache (APA), Forest Oil (FST), Exco Resources (XCO), Swift Energy (SFY), Pioneer Natural Resources (PXD), Chesapeake Energy (CHK), and Carrizo Oil & Gas (CRZO). It has new Neutrals on Anadarko Petroleum (APK), Cabot Oil & Gas (COG), Noble Energy (NBL), SM Energy (SM), Goodrich Petroleum (GDP), and Comstock (CRK).

Casino companies: Wells Fargo has fresh Outperforms on International Game Technology (IGT) and MGM Resorts (MGM). Its Market Performs include Ameristar Casinos (ASCA), Boyd Gaming (BYD), Bally Technologies (BYI), Las Vegas Sands (LVS), Wynn Resorts (WYNN), Penn National Gaming (PENN), Pinnacle Entertainment (PNK), and WMS Industries (WMS).

Isle of Capri Casinos (ISLE): Staying in the space, Imperial Capital covers the small cap stock at Outperfrom and has a $7 price target.

Spirit Aerosystems (SPR): KeyBanc Capital starts SPR at a Buy and establishes a price objective of $25 on a company it calls more profitable and lower risk than in the past.

Bunge (BG): Goldman begins BG with a Sell.

Fortune Brands Home & Security (FBHS): Goldman has a new Neutral on the recent spin-off.

Patriot Coal (PCX): CRT Capital picks up PCX at a Buy.

Infineon (IFNNY): HSBC Securities starts the shares at Overweight.

Ethan Allen (ETH): Argus has a Hold on the furniture firm.

Kratos Defense and Security (KTOS): Shares are covered with a Perform recommendation at Oppenheimer. Shrewd recent acquisitions are balanced out by cyclical headwinds facing the overall US defense industry, the broker believes.


Oil stocks: Marathon Oil (MRO), Hess (HES) and Murphy Oil (MUR) are all boosted to Buy from Hold at Deutsche Bank.

Robert Half International (RHI): Morgan Stanley raises its rating by 180 degrees, Overweight from Underweight.

Rubicon Technology (RBCN): Ticonderoga raises its rating to Neutral from Sell on a belief that sapphire pricing could bottom in early-2012 with strengthening LED demand by mid-2012 leading to firming wafer prices.

Masco (MAS): Goldman moves MAS to Neutral from Sell.

Corrections Corporation of America (CXW): Barclays boosts the prison operator to Overweight from Equal Weight.

Intrepid Potash (IPI): The chemical company gets a Neutral-from-Sell increase at Goldman.


Legg Mason (LM): Citigroup lowers the financial firm to Neutral from Buy.

Toll Brothers (TOL): TOL is taken to Neutral from Buy, also at Citi. For related content, see Dividends? Geography? Debt? How to Spot a Well-Designed REIT.

St. Jude Medical (STJ): Shares get cut to Hold from Buy at Jefferies.

ADTRAN (ADTN): Shares are now Neutral from Buy at Mizuho, which also trims its target by $3 to $35 following ADTN's recent acquisition announcement of the fixed broadband business of Nokia Siemens Networks. Though they are bullish on the international expansion strategy, the broker remains concerned about near-term margin and earnings implications.

USG Corporation (USG): USG gets downgraded to Sell from Neutral at Goldman, sending their shares slumping before the bell.

Southern Copper (SCCO): The stock is reduced to Underweight from Equal Weight by Barclays.

JAKKS Pacific (JAKK): BMO Capital moves JAKK to Market Perform from Outperform.

Scotts Miracle-Gro (SMG): Shares get lowered to Underperform from Neutral by Bank of America-Merrill Lynch.

Railroads: RBC Capital reduces ratings on Norfolk Southern (NSC) and Canadian National Railway (CNI), each now Sector Perform from Outperform.

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