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Upgrades & Downgrades: Analyst Disowns


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

This may be the season of Santa, but a couple of bearded men brought investors nothing but coal yesterday. The Dow (^DJI) dropped a devilish 66 points, falling for a second straight day after Fed head Ben Bernanke kept the gifts under wraps at the final FOMC policy meeting of the year, and analyst Richard Bove reduced his Q4 earnings estimates on Goldman Sachs (GS) by 66%, sending their shares sliding 3.05%. Back in July, Bove called Morgan Stanley (MS) "the new Goldman", intended as a compliment but one which reads in retrospect like a curse given the subsequent showing of both companies. (To be fair, the respected Rochdale researcher admirably admitted to being wrong about banks in a note he wrote over Thanksgiving weekend; surely only cynics are suggesting it's anything more than coincidental that this "moderate mea culpa" was released into arguably the slowest news cycle of the entire year.)

A day after Uncle Sam announced our budget deficit is on course to come in under a trillion dollars for the first time in four years, Congress felt confident enough to turn its attention to the truly important stuff, like regulating TV ad volume. Audio products powerhouse Harman International (HAR) promptly slumped 7.26%; the loudspeaker outfit is based in Stamford Connecticut, where money talks, yet clearly no one was listening.

Wedding ring king Harry Winston Diamond (HWD) lost 6.47% as a survey showed the marriage rate is at a record low. Elizabeth Taylor, who liked marriage so much she did it eight times, cracked a celestial smile as her rocks went for big bucks at Rock Center. Grade school educator K12 Inc (LRN) tumbled 23.58%, making it the NYSE's poorest performer. Kids are apparently taking Gingrich's advice and abandoning the classroom to take up as janitors - and given what just happened in Germany, who can blame them? Newt's rival for the nomination, an "unemployed man" who can somehow still wager $10,000 on trivia, was presumably betting dollars to donuts after bullish analyst initiations on Starbucks (SBUX) - which subsequently hit an all time high - and Dunkin' Brands (DNKN). QE3 may not have set sail but Seaspan (SSW) surged 16.36%, its best showing since an August 2005 IPO. Urban Outfitters (URBN), based in the City of Brotherly Love and seller of cute cuddly Christmas decorations, advanced 5.33% to top the S&P 500 Index. And - no April Fools'– a contract establishing what was then called Apple Computer (AAPL) and signed on April 1, 1976, sold for $1.59 million at auction. No top-tier economic data out today but corporate earnings are expected out of Apogee Enterprises Inc (APOG), Joy Global (JOY), MedCath (MDTH), National Technical Systems (NTSC), Synovis Life Technologies (SYNO), and VeriFone (PAY).


Groupon (GRPN): The recent Internet coupon clipping IPO is begun with a Buy at both Goldman Sachs and Bank of America-Merrill Lynch, an Overweight at Barclays (which sets a $27 price target and cites its "competitive advantages"), an Outperform with Wells Fargo, new Neutrals at Citigroup, JPMorgan, and Janney Montgomery Scott, and a Sector Perform at RBC Capital.

Internet stocks: eBay Inc (EBAY) is resumed with a Buy at Goldman Sachs, which also adds it to their Conviction Buy List. Meanwhile Goldman rolls out Buy rated coverage on (PCLN) and has a Sell and $14 target on Yahoo (YHOO). For related content, see Lousy November Retail Sales Numbers Prove Black Friday Headlines Were a Joke.

Six Flags Entertainment (SIX): Keybanc covers the stock at a Hold.

Vitamin Shoppe (VSI): Goldman has a new Neutral on VSI.

Cintas (CTAS): Shares are begun with a Buy rating at KeyBanc Capital, which establishes a price objective of $36. An emphasis on growing its non-legacy Document Management and First Aid, Safety and Fire Protection Services provides both diversification and an increment increase to earnings.

Complete Genomics (GNOM): GNOM is assigned a Buy and $7 price target at MLV & Co.

Penn West Energy (PWE): Dahlman Rose picks up PWE at a Buy and sets a $27 target price.

Rentech Nitrogen Partners (RNF): Shares are resumed with a Buy and $21 target, also at Dahlman.

Solta Medical (SLTM): The small cap stock is a new Market Perform at Morgan Keegan.

CareFusion (CFN): Morgan Keegan covers CFN at Market Perform and has a $28 price target.

Education stocks: American Public Education (APEI) and Grand Canyon Education (LOPE) are easch assigned an Overweight at JPMorgan.


Avon Products (AVP): The cosmetics company is increased to Outperform from Market Perform by BMO Capital after last night's announcement it is replacing Andrea Jung as CEO.

Best Buy (BBY): Shares are upgraded to Buy from Above Average at Caris.

Ahold (AHONY): The Dutch grocer gets a Buy-from-Hold boost at ING Group.

Acme Packet (APKT): APKT is upgraded to Outperform from Perform with a $45 objective at Morgan Keegan, which says over the long term an emergence of new applications should supply good potential growth.

American Woodmark (AMWD): Robert W. Baird boosts the stock to Ouperform from Neutral and takes its target up by $2, to $16.

FleetCor (FLT): Shares are now Overweight from Neutral at JP Morgan.

SunTrust Banks (STI): STI is taken to Outperform from Market Perform by Sanford Bernstein.

Downgrades: (ACOM): The online family history firm is downgraded to Equal Weight from Overweight at Morgan Stanley, sending shares lower before the bell.

Altria (MO): The tobacco titan is taken to Hold from Buy at Stifel Nicolaus due to valuation concerns.

Best Buy (BBY): The electronics retailer, whose fall of 15.46% yesterday made it the S&P 500′s poorest performer, is this morning moved to Sector Perform from Top Pick at RBC Capital. For more, see Best Buy: Weak Sales, Weak Margins, More Buybacks!

Digital Realty Trust (DLR): Goldman reduces its recommendation to Neutral from Buy.

ADTRAN (ADTN): Shares are cut to Hold from Buy at Jefferies.

CGGVeritas (CGV): JPMorgan moves the stock to Neutral from Overweight.

European supermarket stocks: ING Group slashes ratings on France's Carrefour SA (CRRFY) and Britain's Tesco (TSCDY), both taken to Sell from Buy.

Volterra Semiconductor (VLTR): The chip stock is taken to Buy from Strong Buy with a new lower $28 target at Needham. The broker has fine tuned their model, making slight reductions to hitherto aggressive first quarter earnings estimates.

Fifth Third (FITB): Sanford Bernstein reduces its rating on the regional bank to Market Perform from Outperform.

Invesco Mortgage Capital (IVR): IVR is cut to Market Perform from Outperform at Keefe Bruyette.

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