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Upgrades & Downgrades: Red Letter Day For Aeropostale


Maybe the experts know something we don't know.


Stocks finished strongly, sending the Dow average up a third straight session while the S&P 500's ninth increase in ten days left that index at its highest level since October 1st of '08. GameStop (GME) gapped up 5.85%, good for the best gain in the S&P, as the world's largest video game retailer benefited both from takeover talk and evidence Ivy League educated doctors have too much time on their hands. Investors bought death and sold taxes. Stewart Enterprises (STEI) surged 5.39% after the funeral home operator reported first quarter earnings to die for. Jackson Hewitt (JTX) however imploded 8.87% on an announcement it may breach financial covenants in April, although thankfully after the 15th.

Hence Leona Helmsley may have been onto something when she said "only the little people pay taxes." Though since such a designation presumably encompasses low-lying (4′10″) high-earning ex Labor Secretaries, that should still suffice. And long before the world had heard of Al Jazeera, Al Jarreau was inescapable on the radio. Happy birthday to the singer who today turns 70, especially as in this economy more people than ever are Moonlighting. Today in economics the University of Michigan's preliminary March consumer sentiment survey is set for 9:55AM Eastern. On the corporate front earnings are expected out of American Apparel (APP), AnnTaylor (ANN), Arena Pharmaceuticals (ARNA), Enzo Biochem (ENZ), Hibbett Sports (HIBB), Kirkland's (KIRK), La Jolla Pharmaceutical, and Value Line (VALU).


Financial Stocks: Societe Generale starts Goldman Sachs (GS) at a Buy and assigns a price objective of $190 while Morgan Stanley (MS) has a Hold with a $32 price target.

Pharmaceutical Stocks: In large cap pharma, Jefferies initiates Eli Lilly (LLY) with a Buy and sets a $41 target price while Bristol-Myers (BMY) gets a Hold and $27 target. For Lilly, the firm says the shares remain the cheapest "patent cliff/recovery play" in the sector and trade on a 40% discount to the US market on 2011 estimated EPS. Bristol is seen as challenged by significant overhangs in the base business, with the potential for an at-risk generic launch on Abilify from May 2010.

Dendreon (DNDN): There's no keeping Dendreon out of the news, Robert Baird initiating it Outperform with a $48 price objective. The broker sees significant upside potential ahead of Provenge's likely launch. See also Dendreon and the Prostate Cancer Battle.

Biotech Stocks: Staying in the sector, Piper Jaffray picks up coverage on a whole host of biotechs. Among its Overweights are Affymax (AFFY), Alexion (ALXN), Human Genome Sciences (HGSI), Gilead (GILD), and Celgene (CELG). Biogen Idec (BIIB), BioMarin (BMRN), Amgen (AMGN) and Genzyme (GENZ) highlight the new Neutrals. For more on the sector, see What to Expect From Health-Care ETFs.

Coinstar (CSTR): No ka-ching for Coinstar, begun at a Market Perform by William Blair.

Silicon Graphics (SGI): Morgan Keegan now follows Silicon Graphics at Market Perform, saying it sees the shares as fully valued.

Health Net (HNT): Sanford Bernstein begins Health Net at Market Perform.

Nanosphere (NSPH): Jefferies initiates Nanosphere with a Hold and $4 target.

New Oriental Education (EDU): Deutsche Bank initiates New Oriental Education with a Buy ($90 target) as it is the brand leader by a significant margin.

Intel (INTC): The stock is resumed with a Buy and $25 price target at Needham. The broker believes it should benefit from anticipated PC shipment growth over the next several years.

General Maritime (GMR): The stock gets a new Outperform and $10 target at Credit Suisse, which says their attractive dividend pays investors to wait for the tanker market upturn.

Hanesbrands (HBI): HBI is initiated with a Hold by BB&T Capital.


Kennametal (KMT): Goldman Sachs removes Kennametal from its list of Conviction Sells.

Aeropostale (ARO): Piper Jaffray upgrades Aeropostale, now Neutral from Underweight. See the related story American Eagle Kills Martin + Osa.

Southern Copper (SCCO): Citing favorable valuation and a renewed high dividend policy, Deutsche Bank boosts Southern Copper to Buy from Hold and takes its target up $3 to $38.

Red Robin Gourmet (RRGB): The stock is raised to Strong Buy from Outperform at Raymond James.

National Semiconductor (NSM): Sanford Bernstein gives National Semiconductor a Market Perform-from-Underperform boost.

Clear Channel Outdoor (CCO): Citing favorable positioning to capture national outdoor spending growth and an accelerating digital roll-out, Wedbush Morgan moves Clear Channel Outdoor to Outperform from Neutral and takes its target up to $13.50.


HSBC Holdings (HBC): The bank stock gets downgraded to Neutral from Buy at Goldman Sachs.

Mueller Water (MWA): Goldman also adds Mueller Water to its Conviction Sell list.

Pacific Sunwear (PSUN): FBR Capital cuts Pacific Sunwear to Market Perform from Outperform ($5 target maintained) after a worse than expected fourth quarter non-GAAP loss.

Education Stocks: Credit Suisse lowers American Public Education (APEI) and Grand Canyon Education (LOPE), each now Neutral from Outperform.

Research In Motion (RIMM): The tech stock is removed from the Focus List by Kaufman Brothers.

NRG Energy (NRG): The stock is now Neutral (from Buy) at Bank of America/Merrill Lynch.

Abbot Labs (ABT): The stock is trading lower ahead of the open after being cut to Sell from Hold at Citigroup, which says it seems to be masking underlying profitability issues in 2010 with larger accretion from Solvay than forecast.

Netflix (NFLX): Morgan Stanley moves Netflix Equal Weight from Overweight. See also Why Netflix Is Too Good to Be True.

No positions in stocks mentioned.
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