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Upgrades & Downgrades: Procter & Gamble No Longer Your Best Bet


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

Shares rose for a third straight session, hitting their highest level since last summer, as a battery of earnings announcements came in ahead of expectations and jobless claims posted their biggest one week drop since 2005. Standout stocks again included Apple Inc (AAPL), whose market cap crossed $400 billion for the first time en route to an historic high. Cynics may say announcing a product launch at a museum is an unwitting sign an industry's best days are already behind it, but investors appear willing to bet that a company founded by a college dropout can now crack the university textbook market. All those young students could still learn a thing or two from wily old Warren Buffett, who saw his Omaha steak in Bank of America (BAC) increase 2.35% to top the Dow Average (^DJI) even as the railroad buff coached a 2.15% advance out of industry leader Union Pacific (UNP), sending its stock to a 32 year peak. President Obama journeyed to the House of Mouse - Disney (DIS) - the erstwhile Chicago pol opting to visit fromage free even as Illinois' own Kraft (KFT) hit another new nine-year high. (At least someone said cheese, on what was an exceptionally sad day for an iconic photo firm.)

Jimmy Carter, a peanut farmer predecessor of Obama, will have enjoyed J.M. Smucker(SJM) reaching an all time best. As did Chipotle Mexican Grill (CMG), although our 39th commander in chief has less fond memories that country's cuisine, having deeply offended its leader in 1979 by noting he was once "afflicted with Montezuma's revenge." Elsewhere Imperial Sugar (IPSU) surged 11.58% as shareholders sensibly opted to take a celebrity chef's new-found diabetic wisdom with a pinch of salt. Nordic American Tankers (NAT) tanked 10.53% in a week that the high seas will want to forget. (STMP) fell 0.44% on an otherwise up day but ahead of Sunday's postal rate increase, we can at least rest assured that the mail will get there. Eventually. And in analyst action Scotts Miracle-Gro (SMG), whose CEO wants to get us high, was feeling low after a ratings reduction. This morning in economics, analysts expect an increase in December 2011 existing home sales at 10:00 a.m. Eastern. On the corporate front a frenetic Friday for fourth quarter earnings includes announcements from Comerica (CMA), Fifth Third Bancorp (FITB), General Electric (GE), Parker Hannifin (PH), Schlumberger (SLB), and SunTrust (STI).


Tech stocks: FBR Capital covers Cisco Systems, (CSCO), a Dow component, at Market Perform and assigns a price objective of $22.50. It establishes identical ratings on Research In Motion (RIMM) and Nokia (NOK), setting respective price objectives of $17 and $6. It has Outperforms on Apple Inc (AAPL) ($500 target), Juniper Networks (JNPR) ($27), and Ciena (CIEN) ($18), as they say these stocks offer some of the best risk-adjusted appreciation profiles in the industry. The broker is less bullish on Motorola Solutions (MSI) (Underperform and $37 objective) as it may suffer from a sector rotation towards higher risk/reward peers.

Apparel industry: Northland Securities starts Outperforms on Crocs Inc (CROX) ($26 target), Deckers Outdoor (DECK) ($107), and Finish Line (FINL) ($26). It rolls out Market Performs on Columbia Sportswear (COLM), Cabela's (CAB), Dick's Sporting Goods (DKS), Foot Locker (FL), Hibbett Sports (HIBB), Wolverine World Wide (WWW), and Under Armour (UA).

Specialty chemical companies: Bank of America-Merrill Lynch launches Buy rated research on Agrium (AGU), CF Industries (CF), and Mosaic (MOS).

Discover Financial Services (DFS): The credit card firm snares a fresh Positive recommendation from Susquehanna.

Avanir Pharmaceuticals (AVNR): MLV & Co starts the small cap stock at a Buy, setting a $6 price target. Catalysts include an increasingly favorable reimbursement landscape.

Fortune Brands Home & Security (FBHS): KeyBanc Capital has a Hold on the recent spin off.


Amerigroup (AGP): AGP gets a Buy-from-Neutral upgrade at Bank of America-Merrill Lynch.

Southwest Airlines (LUV): Raymond James lifts LUV to Outperform from Market Perform.

Raytheon (RTN): Bank of America-Merrill raises its RTN recommendation to Buy from Neutral.

SABMiller plc: The British-based brewer is boosted to Hold from Sell at Société Générale.

JDS Uniphase (JDSU): Highlighting a sustainable competitive advantage, strong sales growth, and favorable margin comparisons, Stifel Nicolaus hoists the tech firm to Buy from Hold with a $17 target.

Noble Corp (NE): Shares are now Buy from Hold at Deutsche Bank.

Community Health (CYH): Imperial Capital upgrades the stock to Outperform from In-Line with a $25 target. The equity is trading at a discount to five-year historical lows for its peer group, and facility volumes are expected to increase along with an improving economy.

Solvay SA: Shares of the Brussels-based chemical company are up in Europe this morning after Nomura lifted it to Buy from Neutral, citing a significant value opportunity in the sector.


Procter & Gamble (PG): The Dow member gets downgraded to Equal Weight from Overweight at Morgan Stanley.

Semiconductor stocks: Intel (INTC), also in the blue chip index, is cut to Hold from Buy with a new $26 target at Kaufman Brothers after earnings. A lack of margin upside is their biggest concern. Kaufman also takes rival Texas Instruments (TXN) to Hold at from Buy as they are not expecting to see much upside in its fourth quarter earnings this coming Monday.

Coal companies: Arch Coal (ACI), Patriot Coal (PCX), and James River Coal (JRCC) are all now Neutral from Buy at UBS.

Bayer AG: A headache for the German giant, trading lower in London this morning after being moved to to Neutral from Buy at Nomura.

L'Oreal SA: The French cosmetics company is cut to Equal Weight from Overweight with Morgan Stanley, which does not see an acceleration in growth for 2012.

BlackRock (BLK): Citigroup takes the assset manager to Neutral from Buy.

Lockheed Martin (LMT): Bank of America-Merrill Lynch lowers LMT to Underperform from Neutral.

Johnson Controls (JCI): Shares are reduced by both JP Morgan (Neutral from Overweight) and Needham (Buy from Strong Buy, with its target taken down by $5 to $40.) Among the concerns are weather currently being too warm for the battery and residential furnace businesses, along with softness in the European automotive industry.

Huntington Bancshares (HBAN): HBAN is moved to Market Perform from Outperform at Morgan Keegan, whose objective is $6.25.

Realty Income (O): FBR Capital cuts the company to Perform from Outperform with a $35.50 target price.

SAP AG (SAP) The software stock gets downgraded to Hold from Add at Commerzbank.

Scientific Games (SGMS): The stock is slashed to Hold from Buy by Brean Murray, which says it is too early to determine impact of internet wagering.

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