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Upgrades & Downgrades: Bulls Run on Dunkin'


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

Wall Street's bull got out of its cage for barely an hour on Monday. On Tuesday, it busted loose. The Dow (^DJI) surged 129.82 points, ending at its best level since July 26 after China and India, as one suspects they increasingly will over the next decade, set the economic tone early by unveiling better than expected manufacturing data. The U.S. repeated the feat hours later and this time even Europe failed to spoil the party, with Germany reporting its best jobless figures since reunification a generation ago. Fast food stocks were standouts. An analyst upgrade sent Chipotle Mexican Grill (CMG) to the highest level in its history, an honor matched by both Yum Brands and the golden arches of McDonald's (MCD). "Auld Lang Syne" was of course written by Robert Burns but then so was "The best-laid schemes o' mice an' men go oft awry." When the NYSE authorities resolved to have Weight Watchers (WTW) ring the first closing bell of the new year it no doubt seemed like a good idea, yet their shares tumbled 2.07% amid all the ebullience. Gold was at least worth its wait, the recently slumping metal jumping by the most in 10 weeks.

A new study showed men taking what was traditionally seen as women's work. Yesterday evening television, its finger ever on the cultural pulse, debuted a show called Work It in which guys dress up as gals to work for pharmaceutical firms. Smart move - Merck (MRK) and Pfizer (PFE) are fresh off multi-year share price peaks. The dream job for most red-blooded males would presumably be a sales assistant at Victoria's Secret owner Limited Brands (LTD), yet that stock slumped 2.97% in tandem with Saudi Arabia opting to staff its lingerie shops with females only. The earth moved for construction equipment company Caterpillar (CAT), up 3.73%, and - a little too literally - for the oil fracking industry as petroleum again moved above $100 a barrel. Here at home investors shorted utilities shares, the best performing sector last year, even as long-winded Buenos Aires-based electric utility named Empresa Distribuidora y Comercializadora Norte (EDN) advanced 11.60%. Boston Beer (SAM) dropped 3.44% but at least America's drunkest city needs no excuse to drown its sorrows. And a photo finish in the Iowa caucuses, decided by eight votes out of 122,255, failed to help Eastman Kodak (EK), which dropped 3.41% and is in dire danger of delisting. This morning in economics, November factory orders are seen increasing at 10:00 a.m. Eastern. On the earnings front, Mosaic (MOS), Resources Connection (RECN), and Sonic Corp (SONC) are all due to report results.


American Tower (AMT): AMT is assigned an Outperform with Wedbush.

Groupon (GRPN): The Internet coupon-clipper, a recent IPO, is a new Neutral at Collins Stewart ($19 price target.) Slowing subscriber growth prevents the broker from being more bullish.

Interpublic Group (IPG): The advertising giant gets picked up with a Neutral at Piper Jaffray.

Fusion-io (FIO): Shares are a fresh Hold at The Benchmark Company. Their storage solutions have found a rapidly growing market in data centers, but the current valuation is a concern.

Oiltanking Partners (OILT): Bank of America-Merrill Lynch launches Buy rated coverage on OILT.

InvenSense (INVN): INVN is initiated with an Outperform at Oppenheimer, which assigns a price objective of $13 on a firm it says is a potential takeover candidate in light of impressive 12-18-month revenue and Earnings Per Share growth.


American Eagle (AEO): Janney Montgomery Scott gives the retailer a Buy-from-Neutral boost and sets a price target of $20. Strong holiday channel checks are a good sign for expanded profit margins.

AutoZone (AZO): Shares are added to the Top Picks Live list at Citigroup.

Chipotle Mexican Grill (CMG): Shares, up 58.82% in 2011, are this morning added to the Conviction Buy List at Goldman Sachs.

Dunkin' Brands (DNKN): The stock is now Neutral from Sell at Goldman, sending it up sharply before the opening bell.

Lululemon Athletica (LULU): The yoga wear maker is added to Goldman's list of Conviction Buys.

Auto stocks: Guggenheim starts new Neutrals on Ford (F) and General Motors (GM).

TiVo Inc (TIVO): TIVO is taken to Overweight from Equal Weight with a $12 target at Evercore.

CF Industries (CF): Citigroup hoists the fertilizer firm to Buy from Neutral.

General Dynamics (GD): GD gets an Overweight-from-Neutral upgrade at JPMorgan.

Steel stocks: AK Steel (AKS) is now Neutral from Underperform at Bank of America-Merrill Lynch, which lifts Steel Dynamics (STLD) to Buy from Neutral.

REITs: Morgan Keegan increases American Campus Communities (ACC), Kite Realty (KRG), and National Retail Properties (NNN), all to Outperform from Market Perform.

Warnaco Group (WRC): The apparel outfit is upgraded to Equal Weight from Underweight at Morgan Stanley.


AT&T (T): The Dow member is downgraded to Sector Perform from Outperform at Pacific Crest, which sees limited upside opportunities in wireless.

Alcatel-Lucent (ALU): Staying in the sector, the French telecom firm is taken to Neutral from Buy at Natixis.

Compass Minerals (CMP): CMP is cut to Neutral from Buy at Ticonderoga as the December 2011 quarter was one of the mildest on record in terms of both snowfall and cold temperatures. This is important, as ice-control accounts for about 30% of overall earnings.

REITS: Predicting a potentially challenging year for real estate on account of mediocre economic and employment growth, Morgan Keegan reduces its ratings to Market Perform from Outperform on AvalonBay (AVB), Government Properties Income Trust (GOV), and Home Properties (HME).

Lockheed Martin (LMT): JPMorgan lowers LMT to Neutral from Overweight amid concerns over a decline in government defense spending.

Fertilizer stocks: Mosaic (MOS) Citigroup cuts the chemical company to Neutral from Buy and pulls Potash Corp (POT) from its Top Picks Live List.

NetApp (NTAP): NTAP is now Neutral from Outperform at Credit Suisse, sending shares slumping ahead of the open.

Pinnacle Financial (PNFP): The stock is lowered to Hold from Buy with a $17 objective with Wunderlich, which would revisit the story at a less expensive entry point and a more attractive risk/reward profile.

SAP AG (SAP): The German technology giant gets taken to Sell from Hold with a $46 target price at Ticonderoga. Concerns include a belief that SAP may have endured a difficult fourth quarter for new software license revenue.

Vestas Wind Systems (VWDRY): The Danish firm is downgraded to Underweight from Equal Weight at HSBC Securities.

Virgin Media (VMED): The Royal Bank of Scotland reduces its recommendation to Hold from Buy.

Credit card companies: Visa (V) and Mastercard (MA) are each downgraded to Neutral from Buy at Janney Montgomery Scott.

Church & Dwight (CHD): The consumer products company is moved to Market Perform from Outperform by BMO Capital.

Clearwire (CLWR): CLWR is cut to Hold from Buy at Kaufman Brothers, which slashes its target on the small cap stock by $3 to $2 amid the prospect of flattish revenue trends for 2012.

Education Management (EDMC): Barclays moves the stock to Equal Weight from Overweight.

Energizer (ENR): ENR is trimmed to Market Perform from Outperform by BMO Capital.

Union Pacific (UNP): The railroad firm is reduced to Hold from Buy with an objective of $113 at Stifel Nicolaus due to a stretched valuation.

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