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Upgrades & Downgrades: Airlines Take Flight


Maybe the experts know something we don't know.

Stocks sold off sharply to start September, October, and November but equities opened December -- typically among the market's best months -- with no such worries as the Dow ended above 10,500 for the first time in over a year. Pending home sales posted their best ever annual increase, with Baby Boomer's praying their boomerang babies are behind the gain. Shares of Limited Brands (LTD) got a 5.91% lift, ostensibly on an analyst upgrade, though anticipation of last night's prime time fashion show from its Victoria's Secret subsidiary may have been as big a factor. Cryptology is clearly in vogue; after it was announced halftime at the Super Bowl will be headlined by The Who, Guess? (GES) gapped up 12.96% on impressive earnings.

Car alarms went off for Chrysler after a 26% November US sales drop and the sudden resignation of General Motors' CEO had him crying like a baby, sounds guaranteed to disrupt the slumber of both genders, according to a newly released study. Expect earnings out of Aeropostale (ARO) (see also How Aeropostale Defies Recession for Teens), Cascade (CASC), Charming Shoppes (CHRS), Collective Brands (PSS), Jo-Ann Stores (JAS), Jos. A. Bank Clothiers (JOSB), and Synopsys (SNPS). In economics, Christmas could be less gray than forecast for the unemployed after a Challenger Grey & Christmas layoff survey at 7:30AM Eastern showed job cuts slowing to their lowest level in almost two years. By contrast, 8:15 AM saw ADP's November employment survey show a loss of 169,000 private-sector payrolls, modestly more than anticipated and the 23rd straight month of declines. The Fed's Beige Book survey of regional economic conditions is out at 2:00 PM.


Express Scripts (ESRX): JP Morgan starts Express Scripts at Overweight and establishes a price objective of $102 on strong industry fundamentals.

Cinemas: Hollywood beginnings for Regal Entertainment (RGC) ($18 target), Carmike Cinemas (CKEC) ($13), and Cinemark (CNK) ($17), each initiated at Strong Buy by Raymond James.

Fossil (FOSL): Jesup & Lamont assumes coverage of Fossil with a Buy ($38 target), citing strength in its international wholesale platform and global direct segments.

JA Solar (JASO): Macquarie starts JA Solar at Outperform.

Healthcare: Morgan Stanley picks up Universal Health (UHS), Tenet Healthcare (THC) (each Underweight), Health Management Associates (HMA), Community Health (CYH) (Equal Weights), and LifePoint Hospitals (LPNT) (Overweight).

Qualcomm (QCOM): Calyon Securities starts Qualcomm with an Outperform and sets a $52 target.

Dole Foods (DOLE): Three ways to say essentially the same thing for Dole Foods, now covered by Bank of America/Merrill Lynch (Neutral), Wells Fargo (Market Perform), and Deutsche Bank (Hold).

SolarWinds (SWI): Needham initiates SolarWinds with a Buy on its best-in-class market sales model.

Real Estate: Keefe Bruyette initiates Simon Property Group (SPG) (Outperform) and Glimcher Realty Trust (GRT) (Market Perform), among other REITs.

Energy: Deutsche Bank begins both Consolidated Edison (ED) and Edison International (EIX) with Buys.


Airlines: Morgan Stanley moves the airline space to Attractive on an improving industry risk/reward profile as liquidity concerns abate in coming quafters. AMR Corp (AMR) and UAL Corp (UAUA) (each now Overweight from Equal-Weight) are among the opinion changes.

RF Micro Devices (RFMD): The stock is upgraded to Buy from Neutral on the company's improved cash flow and risk profile.

Regional Banks: Credit Suisse moves to a more constructive stance on regional banks, meaning upgrades for Suntrust Banks (STI) (now Outperform) and BB&T Corp (BBT) (Neutral). See also The Bipolar World of Financial Institution Accounting.

KB Homes (KBH): Credit Suisse also raises its rating on KB Home (Outperform from Neutral) and takes its price target up a dollar to $18 on expectation of a large tax refund and a resumption of order momentum.

Molex (MOLX): The stock is increased to Neutral from Sell at Ticonderoga as the broker believes share price downside is limited at these levels.

Sysco (SYY): Food service outfit Sysco is showing strength before the bell after getting a Buy-from-Hold boost at BB&T Capital Markets.

PF Chang's (PFCB): Morgan Stanley moves PF Chang's to Overweight from Equal Weight.

Assured Guaranty (AGO): Keefe Bruyette upgrades Assured Guaranty to Outperform from Market Perform as the stock now offers a more compelling price point.

DreamWorks Animation (DWA): Janney Montgomery Scott upgrades DreamWorks Animation, now Buy from Neutral.


Constellation Brands (STZ): Sinking spirits for beverage behemoth Constellation Brands, lowered to Sell from Neutral at Goldman Sachs.

Pepco Holdings (POM): The stock gets a Neutral-from-Outperform valuation based cut at Credit Suisse, which maintains its $16 target.

Boardwalk Pipeline Partners (BWP): The stock walks the plank, downgraded to Market Perform from Outperform at Wells Fargo.

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