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Upgrades & Downgrades: McDonald's Bulks Up


Maybe the experts know something we don't know.

Stocks skidded by the most in a month on Friday, falling from their highest levels since October of '08 and ending the week in the red as earnings season opened inauspiciously. Even as some investments maintained fiscal fitness, others sagged like so many New Rear's resolutions. Treadmill titan Nautilus (NLS) raised the roof with a 22% advance ahead of the long weekend while Weight Watchers (WTW), down 1.02%, fell through the floor. (Where it evidently has many members for company.)

As the world mourned an Alligator, financial executives shed crocodile tears on Capitol Hill. And Northern Ireland was rocked by a political scandal whose script may one day Graduate to a movie. It's a quiet day in economic data but expect earnings out of Citigroup (C), Cree (CREE), CSX Corp (CSX), Fastenal (FAST), Forest Labs (FRX), IBM (IBM), Parker Hannifin (PH), PetMed Express (PETS),and TD Ameritrade (AMTD).


Biotech Stocks: Biogen Idec (BIIB) is initiated at a Buy ($70 target price) at Standpoint Research, which says the firm should benefit from funds rotating out of high beta stocks and into healthcare. McKesson (MCK) also gets a Buy at the same broker as it is best-positioned to benefit from increased demand for generic drugs. See also How to Play Generic Drug Stocks.

Darden Restaurants (DRI): The stock is also picked up with a Buy and $45 target at Standpoint as the chain is well placed to gain from a spending rebound.

Supervalu (SVU): SVU is started at Buy by Standpoint as headwinds are beginning to reverse.

Ryanair (RYAAY): UBS initiates low cost carrier Ryanair at a Buy.

CIT Group (CIT): The stock is resumed with a Buy at Stifel Nicolaus, $46 target.


McDonald's (MCD): The restaurant chain is upgraded to Outperform from Neutral at Credit Suisse and its target taken to $71 from $69. Current estimates and valuation fail to adequately reflect the company's ability to build upon market share gains.

Vale SA (VALE): Barclays boosts mining play Vale SA (Overweight from Equal-weight) and increases its price objective to $39 from $31.

Host Hotels (HST): Bank of America/Merrill Lynch hoists Host Hotels to Buy from Neutral.

Total SA (TOT): European oil giant Total SA gets taken to Buy from Hold at Collins Stewart.

US Steel (X): The stock gets a Buy-from-Hold increase at Deutsche Bank, with the price objective up a steep $77 from $44, due to the attractiveness of its integrated business model.

Xilinx (XLNX): The stock is upped to Outperform from Sector Perform at RBC Capital on continued improvement in enterprise spending.

Tibco Software (TIBX): TIBX is taken to Outperform from Sector Perform at Pacific Crest with a target of $12.

Louisiana-Pacific (LPX): The stock is upgraded to Outperform from Sector Perform at RBC Capital.

Ciena (CIEN): The tech stock is up sharply ahead of the open after an Outperform-from-Neutral upgrade at Credit Suisse, with the target now $19 from $15.50. Ongoing momentum in revenue growth is expected.

Philip Morris International (PM): The tobacco company is upgraded to Outperform at Credit Suisse on an exchange rate improvement.


Burger King (BKC): The fast-food chain is cut to Neutral from Outperform at Credit Suisse, the price objective also being reduced by $2 to $21. Heightened franchisee tensions are among unfavorable factors cited.

Daimler AG (DAI): The stock is downgraded to Neutral from Buy at Nomura.

Baxter International (BAX): Citigroup reduces Baxter International to Hold from Buy.

Genworth Financial (GNW): Bank of America/Merrill lowers Genworth Financial, now Neutral from Buy.

HSBC Holdings (HBC): BNP Paribas takes HSBC Holdings to Underperform from Neutral.

BHP Billiton (BHP): The oil stock gets downgraded to Hold from Buy by ING Group. See also Two Ways to Play: OPEC Unlikely to Cut Supply.

Bare Escentuals (BARE): Suntrust cuts Bare Escentuals (Neutral from Buy) after last week's announcement it will be acquired by Japan's Shiseido.

IMAX Corp. (IMAX): The stock is lower before the bell after Merriman cut it to Sell from Neutral due to valuation.

Dr. Reddy's Labs (RDY): Deutsche Bank takes Dr. Reddy's Labs to Sell from Hold on concerns a resurgent Teva (TEVA) could crowd-out large generic companies across markets.

JA Solar (JASO): The solar energy stock is now Neutral from Buy at Broadpoint Research.
No positions in stocks mentioned.
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