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Upgrades & Downgrades: Xerox Can't Reproduce the Glory Days

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

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The Crimson Tide may reign in New Orleans but on the New York Stock Exchange it's a sea of green. Dow Industrials (^DJI) rose again, adding to last week's absolutely fabulous showing, amid high hopes for the upcoming deluge of fourth quarter corporate earnings. With renewed irrational exuberance in equities and the Stoli-and-Boli swirling Patsy and Edina suddenly on our screens again, it's almost as if the 1990s are back. (If not for Apple Inc (AAPL), which almost went bankrupt in 1997 and yesterday hit new record intra-day high of $427.75, nor Eastman Kodak (EK), which peaked at $94.75 early that same year and is now nearly bankrupt.) Although the Mayans, whose prognostication record compares favorably with any Wall Street economist, long ago predicted that the gig is up for us all in 2012, Neflix (NFLX) is clearly determined to die another day, or at the very least go out in a blaze of glory. Its shares, which had an end-of-time look to them in 2011 with a 60% skid, are already up over 40% this year and yesterday again outpaced all S&P 500 (^GSPC) advancers - even if they have been lowered today by Bank of America (BAC), itself bouncing back nicely from a 12-month showing straight out of Armageddon.

In analyst action Dow member Merck (MRK), which once had three ratings in a single day at BofA's Merrill Lynch unit, slipped after being cut but investors can hardly claim to have lost their shirts on the pharmaceutical firm, which has recently traded at a multi-year peak. A similar downgrade of Abercrombie & Fitch (ANF), whose shirt advertising is all about lost shirts, sent their shares to a fresh 52-week low. And Wall Street pay is poised to plunge. Maybe the 1% can go hat-in-hand to the 99%, who appear to be flush with cash? This morning in economics, November 2011 wholesale inventories are out at 10:00 a.m. Eastern. On the corporate front, earnings are expected from RF Monolithics (RFMI), Rocky Mountain Chocolate Factory (RMCF), and Synnex Corp (SNX).


Initiations:

AT&T Inc (T): The telecom titan, in the Dow Average, is resumed with a Hold at Deutsche Bank.

Ameristar Casinos (ASCA): Imperial Capital establishes an Outperform, assigning a $24 price objective. The company trades at a discount to most gaming peers in terms of total enterprise value and shares stand to gain sharply should a Massachusetts gaming license be forthcoming.

Auto dealerships: AutoNation (AN) and Group 1 Automotive (GPI) are each new Neutrals at Sterne Agee, which starts Penske Automotive (PAG) at a Buy.

Corning (GLW): Shares are now covered with a Neutral at Piper Jaffray.

Nielsen Holdings (NLSN): Benchmark Company begins with a buy, setting a $37 target price on a franchise it says can boast both a well protected, dominant industry position and steady growth prospects.

HSN, Inc (HSNI): The home shopping network must be garnering good Nielsen ratings, for it is begun with a Buy and $45 price target at Stifel Nicolaus. The broker believes that despite the stereotypes associated with such shoppers, its core customer is in fact more likely to be in the "have" than "have-not" category.

Liberty Media (LINTA): Staying in the sector, Stifel also starts this stock at a Buy ($21 target) as its proprietary products and strong on-air hosts have given QVC enviable pricing power.

Precision Drilling (PDS): Shares are picked up with a Buy and $14 target at Dahlman Rose, which says it is well positioned to capitalize on the significant increase in US and Canadian horizontal shale drilling over upcoming years.

ONEOK Partners (OKS): Morgan Keegan has a Market Perform and $61 target on the energy outfit.

TripAdvisor (TRIP): Nomura has a new Neutral on TRIP.

Zynga (ZNGA): The recent social-media IPO, whose shares nosedived 9.19% yesterday, is initiated with an Overweight at Piper Jaffray this morning.


Upgrades:

Nestlé: The Swiss confectionery giant gets a Neutral-from-Underperform upgrade at Exane BNP Paribas.

Capital One Financial (COF): Shares are named a new Top Pick at FBR Capital, which cites the potential for fiscal 2013 earnings accretion as it completes assorted acquisitions.

Hotel stocks: Hyatt Hotels (H) and Marriott International (MAR) are both hoisted to Buy from Neutral at Bank of America-Merrill Lynch.

Penn National Gaming (PENN): Bank of America-Merrill Lynch gives a Buy-from-Neutral lift to PENN.

Cirrus Logic (CRUS): Shares are lifted to Buy from Hold with a $26 target price at Stifel Nicolaus, which says the recent sell off has created a buying opportunity.

Juniper Networks (JNPR): The tech outfit is taken to Overweight from Neutral at Piper Jaffray.

Agrium (AGU): The fertilizer firm is increased to Outperform from Market Perform by BMO Capital.

Tractor Supply (TSCO): It's clearly a good day to be a farmer, with Goldman Sachs also taking TSCO to Neutral from Sell. Shares are up sharply before the bell as a result.

Valeant Pharmaceuticals (VRX): The drug maker is moved to Overweight from Equal Weight at Morgan Stanley.

VASCO Data Security (VDSI): VDSI is hoisted to Buy from Hold with an $8.25 objective at Wunderlich. The recent share price pullback represents an attractive entry point for a firm whose enterprise business trends are inspiring increased confidence.


Downgrades:

Walt Disney (DIS): The Dow component is cut to Equal Weight from Overweight by Barclays.

Xerox (XRX): Barclays reduces its rating on the photocopy king to Equal Weight from Overweight.

Netflix (NFLX): As mentioned, shares are now Underperform from Neutral at Bank of America-Merrill Lynch after the recent parabolic share price run up.

Con Edison (ED): The electric utility gets slashed to Sell from Hold at ISI Group.

Danone (DANOY): The French yogurt firm is downgraded to Underperform from Neutral by BNP Paribas.

SABMiller plc (SBMRY): The British-based brewer gets reduced to Hold from Buy at Royal Bank of Scotland.

E.ON AG: Continuing our European tour, the German energy giant is now Neutral from Buy at UBS.

Alaska Air (ALK): Deutsche Bank downgrades ALK to Hold from Buy.

Starwood Hotels (HOT): Bank of America-Merrill Lynch lowers the lodging stock to Neutral from Buy.

Complete Genomics (GNOM): GNOM gets cut to Perform from Outperform at Oppenheimer after disappointing preliminary fourth quarter earnings. Concerns include further price erosion, slower-than-expected backlog growth, and ongoing operational missteps.

Home health care: Gentiva Health Services (GTIV) and Amedisys (AMED) are both now Underperform from Neutral at Robert W. Baird, with respective price objectives of $4 and $8. The sector still seems to price in too optimistic an outlook for 2012, and investors materially underestimate the risk to therapy cuts.


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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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