Upgrades & Downgrades: Why Apple Won't Fall Far

By Justin Sharon Dec 03, 2009 9:15 am

Maybe the experts know something we don't know.

Stocks meandered in sluggish activity, although a 0.38 point gain was good enough for a fresh 2009 high in the S&P 500. Potash Corp (POT) (+4.97%) was up sharply, due less to Marilyn Monroe than its CEO saying fertilizer demand is picking up. Gold rose to another record on a Rosy scenario from a former Merrill Lynch economist. Meanwhile Merrill’s corporate parent Bank of America (BAC) is up sharply before the bell after deciding $45 billion in TARP repayments is a small price to pay to better pay the Price, freed from Uncle Sam’s salary restrictions. See also Two Ways To Play: Bank of America Emerges from TARP.

Today’s earnings announcements include firearm outfit Smith & Wesson (SWHC), with newly nervous Goldman (GS) employees emerging as a potential profit center for the firm.

Also releasing results are Bombardier, Del Monte (DLM), Diamond Foods (DMND), Marvell (MRVL) (see also Use Marvell Technologies Like a Crystal Ball), Mentor Graphics (MENT), Novell (NOVL), Siemens (SI), Toll Brothers (TOL), and Toronto-Dominion Bank (TD). In economics, at 8:30AM Eastern initial unemployment claims surprisingly fell 5,000 to 457,000 last week while worker productivity -- which certainly wouldn’t have been much in evidence on Cyber Monday -- was revised down more than expected to 8.1% in the third quarter according to final figures released at the same time. Unit labor costs fell 2.5%. Forecasts call for a slight increase in the Institute for Supply Management’s November non-manufacturing index, out at 10:00AM.

Initiations

Apple (AAPL): The stock is begun at Buy at Jesup & Lamont, which sets a $240 target price. The broker says an emergence of ultra-portable PCs present an opportunity.

Online Retailers: eBay (EBAY) is initiated with an Outperform ($360 target) at JMP Securities, which also starts Amazon.com (AMZN) at Market Perform.

Sprint Nextel (S): Wells Fargo resumes Sprint Nextel with a Market Perform.

Oshkosh (OSK): Bank of America/Merrill Lynch initiates Oshkosh at Buy.

Sinopec Shanghai (SHI): HSBC initiates Sinopec Shanghai at Underweight.

Starwood Property Trust (STWD): Wells Fargo starts Starwood Property Trust with Market Perform.

Real Estate Investment: Sandler O’Neill assumes coverage of Capstead Mortgage (CMO) (Hold; $14.50 target) and Annaly Capital (NLY) (Buy; $21).

DryShips (DRYS): Deutsche Bank begins DryShips at Buy ($10 objective), the broker believing potential cash flows are undervalued by the market.

Accenture (ACN): Barclays initiates Accenture at an Equal-weight.

Computer Sciences (CSC): Barclays also picks up Computer Sciences at Overweight and sets a $66 target.

Miscellaneous: Morgan Joseph now covers Crown Castle (CCI), SBA Communications (SBAC) (Buys on both) and American Tower (AMT) (Hold).

RailAmerica (RA): The stock is initiated with a Hold at Stifel Nicolaus.

Upgrades

Cisco Systems (CSCO): The tech stock is upgraded to Buy at Broadpoint Research. See also Does Hewlett Packard Have Cisco Worried?

LeapFrog (LF): The stock gets a Buy-from-Hold upgrade at Stifel Nicolaus.

Bank of America (BAC): The financial stock is upgraded to Outperform by both Calyon Securities and FBR Capital ($20 target).

Real Estate: Goldman Sachs’ more constructive stance on the US REIT industry sees upgrades for Brookdale Senior Living (BKD) (Buy from Neutral) and AvalonBay (AVB) (Neutral from Sell).

Tenet Healthcare (THC): The stock gets lifted to Buy from Hold at Soleil Securities, which sets a $6.25 target as its operational turnaround has gained traction.

Kennametal (KMT): JP Morgan raises its Kennametal rating to Overweight from Neutral and takes its target up $3 to $30.

Weyerhaeuser (WY): The stock gets a Buy-from-Neutral increase at Bank of America/Merrill Lynch. The price objective is now $47, up from $41.

Assured Guaranty (AGO): UBS upgrades Assured Guaranty (Buy from Neutral) due to the resolution of its Moody’s review.

Goldcorp (GG): The gold stock is upgraded to Buy from Neutral at UBS. For more on the sector, see this morning's Five Reasons Gold Is Great in the Long Run.

Downgrades

Enbridge Energy (EEP): The stock is downgraded to Hold from Buy at Canaccord Adams.

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