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Upgrades & Downgrades: Shutterfly Stock Not a Pretty Picture


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

Twenty-four hours after the Dow (^DJI) dropped an inauspicious 13, it jumped a lucky 21. Some would say this is a sign Wall Street's fortunes - figurative and literal - have taken a turn for the better but, given today's date, we probably shouldn't speak too soon. Still, S&P 500 (^GSPC) shares advanced for a fourth straight session and ended at their highest level since July 28. Unusually, it was Europe - specifically solid debt auctions in Italy and Spain - that engendered optimism even as the recently improving American economy reported disappointing data on both inventories and retail sales. Weekly jobless figures also increased unexpectedly, so best to hold off on excuses like "my cat had the hiccups" when trying to explain why you were late for work. That couple who called 911 after finding themselves lost in a maze of maize might like to know that unsold corn supplies just dropped less than expected, helping send shares of Sanderson Farms (SAFM) surging 6.33%. Indeed investors everywhere fled the city - and specially Urban Outfitters (URBN) after its 18.63% implosion on Wednesday - instead opting to till the land, hence Tractor Supply (TSCO) advancing 9.97% to a new high.

Elsewhere Bank of Ireland (IRE) gained 9.42%; considering its home economy was the only one of Europe's major stock markets to increase in 2011, the Emerald Isle could make a case to be booted from the PIIGS. Although it may be too hot for the BRICs to handle, looking at last year's showing from Brazil (down 18.11%), Russia (-29.6%), India (-39.8%), and China (-21.68%). Also across the Atlantic, an analyst downgrade sent stock in British Sky Broadcasting (BSYBY) slumping 1.97%. The entity, 39.1% owned by Rupert Murdoch's News Corp (NWSA), is currently being investigated by the country's monopolies agency. Which brings to mind the old joke about 'why is there only one Competition Commission?', even if the octogenarian media mogul may not see the funny side. And how Chairman Mao, a huge fan of state-owned monopolies of course, must be spinning in his grave. Citizens of the world's largest communist country rioted after being prevented from getting their hands on the latest gizmo from Apple (AAPL), one of capitalism's greatest ever success stories. It's a fairly light data day in economics ahead of the long weekend but analysts are expecting an increase in the University of Michigan's preliminary consumer sentiment survey for January at 9:55 a.m. Eastern.


American International Group (AIG): Saying the equity's inherent value is balanced out by fundamental headwinds, Stifel Nicolaus has a Hold on AIG.

First Niagara Financial Group (FNFG): Bank of America-Merrill Lynch begins FNFG at a Neutral.

Transportation/Logistics: FBR Capital covers CAI International (CAP), C.H. Robinson Worldwide (CHRW), J.B. Hunt Transportation (JBHT), and Ryder System (R) at Outperform and initiates Market Peforms on Seaspan (SSW), Textainer Group (TGH) and Atlas Air (AAWW). The broker believes one should invest in names that offer the best balance between cyclical upside exposure and downside protection.

Regional banks: Cathay Bancorp (CATY) and BankUnited (BKU) are assigned Outperforms with Wells Fargo, which establishes Market Performs on East West Bancorp (EWBC), Regions Financial (RF), SVB Financial (SIVB), and Signature Bank (SBNY).


Bally Technologies (BYI): BYI gets a Buy-from-Neutral boost at Goldman Sachs.

Children's Place (PLCE): Bank of America-Merrill Lynch raises its recommendation on the retailer by an unusual 180 degrees, to Buy from Underperform. Shares are higher ahead of the open as a result.

Chipotle Mexican Grill (CMG): The fast food firm is moved to Outperform from Market Perform with brokers William Blair.

Citrix Systems (CTXS): Citigroup takes the tech stock to Buy from Neutral.

European telecoms: British-based BT Group (BT) - Buy from Reduce - and Vodafone (VOD) - Buy from Neutral - are both increased at Nomura. Regarding the latter, the brokerage notes it "has the least exposure to Europe of all large caps - 32% of earnings on our estimates."

Total S.A. (TOT): Shares of the French energy firm are trading higher in Europe this morning on the back of an Overweight-from-Neutral upgrade at JPMorgan Cazenove, which sees "realizable upside" from current levels.

Safeway (SWY): The grocery giant gets hoisted to Buy from Hold at Jefferies.

VCA Antech (WOOF): The dog days are over for this animal healthcare outfit, now Buy from Neutral at Suntrust.


Akamai Technologies (AKAM): Shares are now Neutral from Buy at DA Davidson, which establishes a price objective of $36.

Beacon Roofing Supply (BECN): Suntrust reduces its rating to Neutral from Buy.

Homebuilders: Beazer Homes (BZH) and PulteGroup (PHM) both get downgraded to Neutral from Buy at Guggenheim.

Canadian National Railway (CNI): The stock is cut by both JPMorgan (Underweight from Neutral) and Canaccord Genuity (Hold from Buy).

CEMEX S.A. (CX): The Mexican cement stock is moved to Equal Weight from Overweight by Barclays.

Charles Schwab Corp (SCHW): The discount broker is downgraded to Market Perform from Outperform with Wells Fargo.

Dr Pepper Snapple (DPS): Wells downgrades the beverage company to Market Perform from Outperform.

Exelon (EXC): The energy outfit is lowered to Neutral from Buy at Bank of America-Merrill Lynch.

Diversified utilities: Robert W. Baird gives Neutral-from-Outperform ratings reductions to Alliant Energy (LNT) ($28 target price), Hawaiian Electric (HE) ($28), UIL Holdings (UIL) ($35) and Wisconsin Energy (WEC) ($35.)

JDA Software (JDAS): Shares are moved to Market Perform from Outperform at JMP Securities.

United Parcel Service (UPS): The parcel delivery giant gets downgraded to Neutral from Overweight at JPMorgan.

Health Net (HNT): Morgan Stanley slashes HNT to Underweight from Equal Weight.

McDermott International (MDR): The energy firm gets downgraded to Neutral from Buy at Goldman.

Metabolix (MBLX): Jefferies cuts the small cap stock to Hold from Buy.

MetLife (MET): The insurance outfit is reduced to Market Perform from Strong Buy at Raymond James.

JA Solar (JASO): Raymond James takes the alternative energy play to Underperform from Market Perform.

Shutterfly (SFLY): The photo-sharing service company, whose shares are sharply lower before the bell on news its CFO is to leave, gets cut to Equal Weight from Overweight at Morgan Stanley.

Tesco ADR: Britain's biggest retailer by sales, which fell 15.09% yesterday to a new 52-week, is this morning moved to Neutral from Outperform at Credit Suisse. Holiday sales were weaker than expected, which will adversely impact profit growth.

VMware (VMW): The tech firm gets taken to Sell from Neutral at Citi.

Williams-Sonoma (WSM): The Pottery Barn owner, a poor performer yesterday, is now Neutral from Outperform with Wedbush.

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