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Upgrades & Downgrades: Hershey's Kisses for Valentine's Day?

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

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Kicking the debt can can be contagious - indeed China now appears to have picked up the habit from both America and Europe - but one wonders how wise it is as a long term strategy. Stocks rose after Greece approved an austerity measure, with investors opting to ignore the fact that the agreement's less than lofty aim is merely to try and tackle the country's 120% debt-to-GDP ratio…by 2020. As we boldly go to hitherto unimaginable deficits, let's at least enjoy the ride in the company of USS Enterprise's Captain Kirk, whose Priceline.com (PCLN) rose 4.79% to hit its highest level since March 2000. (His sidekick Spock didn't do too badly either, Vulcan Materials (VMC) advancing to a new multi-year peak.) Former community organizer President Obama unveiled his 2,000 plus-page budget - the Gettysburg Address checked in at 269 words - at a community college. There was method to the madness however, as such prolific government printing helped send International Paper (IP) up 4.54% to post the S&P 500's (^GSPC) second strongest performance. And the community college graduate who helped sequence the human genome in his spare time - take that, Harvard snobs - had the satisfaction of seeing Complete Genomics (GNOM) surge 41.64% to top the entire Russell 2000 Index.

Two million native sports fans can't see the New York Knicks play but team owner Madison Square Garden (MSG) stealthily gained 3.76% to a fresh record, LCA-Vision (LCAV) jumped 13.46%, and as Athenians wiped away tear gas Regeneron Pharmaceuticals (REGN) rose 12.31% amid high hopes for its eye disorder drug. While Newark, New Jersey, mourned its native daughter, news of her death sent Grammy viewership to its highest level since 1984, the year Mark Zuckerberg - who felt philanthropic towards the city's schools at an awfully convenient time - was born. The Facebook founder made billions being Friended by others, but the greatest love of all may well be learning to love yourself. Hopefully not on Valentine's Day, however. The drumbeat of economic data quickens after an unusually quiet stretch with analysts expecting an increase in December 2011 business inventories at 10:00 a.m. Eastern. On the corporate front Avon (AVP), Banco do Brasil, Fossil (FOSL), Goodyear Tire (GT), MetLife (MET), Omnicom (OMC), Peet's Coffee & Tea (PEET), ThyssenKrupp, Weight Watchers (WTW), and Zipcar (ZIP) are all due to release results.


Initiations:

Food stocks: Morgan Stanley starts Hershey (HSY) and Kellogg (K) with Equal Weights on each. It assigns Overweights on Dow (^DJI) component Kraft Foods (KFT), cereal stock General Mills (GIS), and Mead Johnson Nutrition (MJN). Underweights are established for HJ Heinz (HNZ) and Campbell Soup (CPB).

Domino's Pizza (DPZ): The fast good firm is a new Hold at Miller Tabak, which has a $36 price target. In light of the near-doubling of DPZ's share price in the past 12 months, they would await a pullback before adding new positions.

Caesars Entertainment (CZR): The casino company, a recent IPO, is an Outperform at Imperial Capital. Its objective is $16.20.

Internet stocks: Google (GOOG) gets assigned a Buy at Capstone, which starts TripAdvisor (TRIP) with an even more bullish Strong Buy. Meanwhile it picks up Pandora Media (P) at Hold.

Oil and gas: Deutsche Bank has Holds on, among others, El Paso (EP), Williams Partners (WPZ), Chesapeake Midstream (CHKM), and TransCanada (TRP). It begins Buys on Rose Rock Midstream (RRMS), Enbridge Inc (ENB), and Spectra Energy (SE).

Murphy Oil (MUR): Shares are begun with a Buy and assigned a $71 price objective by Brean Murray, which says it is well-positioned in light of recent weakness in the North American gas market.

Ariad Pharmceuticals (ARIA): ARIA is resumed with an Outperform at RBC Capital Markets.

Biogen Idec (BIIB): BIIB gets picked up at a Market Perform with Wells Fargo.

Eli Lilly (LLY): The drug-maker is a fresh Hold at ISI Group.


Upgrades:

Barclays (BCS): BNP Paribas boosts the British bank, downgraded elsewhere yesterday, to Outperform from Neutral.

Gap Inc (GSP): The clothing company is now Buy from Neutral at Citigroup, sending shares higher ahead of the open.

Regal Entertainment (RGC): Piper Jaffray raises its recommendation to Overweight from Neutral.

Williams-Sonoma (WSM): The Pottery Barn owner is upgraded to Buy from Neutral at Citi.

HollyFrontier (HFC): Goldman adds the company to its Conviction Buy list.

Mylan Labs (MYL): Goldman Sachs gives MYL a Buy-from-Neutral boost.

Rackspace (RAX): Benchmark Company hoists its rating to Buy from Hold and takes their target price up by $15 to $60 amid solid fourth quarter results and encouraging 2012 trends.


Downgrades:

Bank of America (BAC): The financial firm, this year's best performing blue chip after an awful 2011, is now Neutral from Buy at Citigroup.

Bed Bath & Beyond (BBBY): Citi lowers its assessment to Neutral from Buy, sending the stock down slightly ahead of the open.

Arch Coal (ACI): Another day, another downgrade for the fossil fuel company, this time taken to Hold from Buy at Argus. Issues include electric utilities, which account for approximately 50% of U.S. coal consumption, increasingly switching to lower-priced natural gas.

Intercontinental Hotels Group (IHG): IHG gets cut to Hold from Buy at Jefferies.

Roche Holding (RHHBY.PK): The Swiss drug-maker is downgraded to Neutral from Buy at Citi.

AthenaHealth (ATHN): Leerink Swann lowers ATHN to Market Perform from Outperform.

CBOE Holdings (CBOE): The exchange operator is now Neutral from Outperform at Credit Suisse.

Cloud Peak Energy (CLD): Barclays cuts CLD to Underweight from Equal Weight.

Lumber Liquidators (LL): LL is slashed to Sell from Neutral at Janney Montgomery Scott.

Stoneridge (SRI): Citing an increasingly steep valuation, KeyBanc Capital cuts the stock to Hold from Buy.

SunTrust Banks (STI): Shares get downgraded to Sell from Hold at ISI Group.

Alternative energy: Yingli Green Energy (YGE) and Trina Solar (TSL) are each taken to Hold from Buy at Auriga.
No positions in stocks mentioned.
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