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Upgrades & Downgrades: Dollar General Could Buck Up


Maybe the experts know something we don't know.

A hale and hearty healthcare sector sent stocks surging to their highest levels since the autumn of '08 even in the face of a firmer dollar. With roughly 90% of S&P 500 shares posting gains the market's breadth was suitably agreeable on the day chewing gum maker Dentyne (CBY) saw its parent swallowed up in a $19.5 billion Anglo-American acquisition. Securities and (Brinks) Security (BCO) proved equally profitable, with the installer of alarm systems surging 32.21% following its takeover by Tyco (TYC). Alarm bells are ringing for donkeys -- exactly a year after Obama's inauguration, today's newspapers make dire reading for Democrats. The memory of an elephant, Republican or otherwise, is required to recall the last time Ted Kennedy's senate seat went to the GOP. Unexpected indeed, though a day in which English pubs were ordered to serve tap water demonstrated anything's possible.

While reserving a raspberry for bar owners, Brits could at least toast Burberry, up 8.26% in London on strong sales and Cadbury, 6.15% higher after its buyout. Since their bear hug beat out Hershey's (HSY) Kiss, one hopes Kraft (KFT) will be an appropriate custodian for such an august institution especially as American owners of Liverpool and Manchester United, the country's two most storied soccer teams, aren't exactly flavor of the month across the pond. In 8:30 AM Eastern economics, December's Producer Price Index increased a more than expected 0.2% overall though the core rate came in flat. Separately, housing starts were a little light last month at 557,000. Coach (COH) has already kicked off a bus load of earnings announcements; other companies reporting results today include AMR Corp (AMR), Bank of America (BAC), Brinker International (EAT), Dr. Reddy's Labs (RDY), eBay (EBAY), Morgan Stanley (MS), Northern Trust (NTRS), State Street (STT), Starbucks (SBUX), US Bancorp (USB), and Wells Fargo (WFC). See also Four Earnings Season Specials.


Advertising: Ad giants Omnicom (OMC) (Buy; $47 price objective) and Interpublic (IPG) (Hold) are initiated at Citigroup.

Rockwell Automation (ROK): The stock gets picked up with a Neutral by Goldman Sachs.

Lincoln Educational Services (LINC): Oppenheimer assumes coverage on Lincoln Educational Services at Perform as it believes multiple expansion may be limited in the near-term.

Kar Auction (kAR): The stock is now covered by both Bank of America/Merrill Lynch (Buy) and Robert Baird (Outperform; $18 target price).

DuPont (DD): DuPont is picked up at Equal Weight by Morgan Stanley; $37 target.


IBM (IBM): The computer maker is upgraded to Buy from Hold at Canaccord Adams following earnings.

CBS (CBS): Are you watching, Conan? Jefferies upgrades CBS to Buy from Hold and increases its price objective to $16 from $12 on sequentially improving ad trends.

Dollar General (DG): The discount retailer is initiated with a Buy ($29 target) at MKM Partners on its merchandising and operational improvements.

Citigroup (C): Bick Bove gives Citigroup a fillip, upgrading it to Neutral from Sell at Rochdale Securities. For related content, see The Washington Witch Hunt.

Royal Bank of Scotland (RBS-B): Staying in the sector, Royal Bank of Scotland raises HSBC Holdings to Buy from Hold.

Tesco (TESO): The stock is taken to Outperform from Market Perform at FBR Capital, which also increases its target by $8 to $18. Top drive orders are expected to accelerate over the next few quarters as contract drillers look to upgrade their rigs.

Sierra Wireless (SWIR): Barclays boosts Sierra Wireless to Overweight from Equal Weight with a $16 price target.

Real Estate: In the real estate arena, Barclays gives Overweight-from-Equal Weight increases for Camden Property Trust (CPT) and Essex Property Trust (ESS), among others.

Archer Daniels Midland (ADM): The stock is advancing before the bell after a Buy-from-Hold boost by Citigroup.


Big Lots (BIG): Today could see a big loss for Big Lots, lowered to Neutral from Overweight at JP Morgan even as its price objective increases $2 to $32.

REITs: Avalonbay (AVB) (Equal-weight from Overweight) and Post Properties (PPS) (Underweight from Equal-Weight) are among the REITs lowered by Barclays.

Lukoil: The stock gets cut to Hold from Buy at Deutsche Bank.

Pioneer Natural Resources (PXD): The stock is now Neutral from Buy at Goldman Sachs.

Tractor Supply (TSCO): No fun on the farm for Tractor Supply, which gets cut to Neutral from Buy at Goldman.

Advance Auto Parts (AAP): the stock is lowered to Neutral from Buy at Bank of America/Merrill.
No positions in stocks mentioned.
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