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Upgrades & Downgrades: Split Decision on Starbucks

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Maybe the experts know something we don't know.

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It's as well many investors made (or stole) hay while the sun shone, because the reigning in of Chinese lending and a deluge of disappointing earnings sent stocks into their steepest tailspin of the year. Pacific Sunwear (PSUN) slumped 3.80% as it became apparent it does indeed pour in Southern California, despite what a siren song of the 70's may say. Among major markets Nasdaq bled the most red ink, as one might expect after American Red Cross officials rang its opening bell, but the Dow Jones and S&P 500 both also ended off by over one percent. Down 2.28%, Pride (International) (PDE) did indeed come before a fall, or rather after a downgrade by BMO Capital, and Cliffs Natural Resources (CLF) fell off one, tumbling 4.62%.

By contrast it's a fine time to be either Meryl Streep or Merrill Lynch. Three days after the actress took home yet another Golden Globe, a silver lining for Bank of America (BAC) appeared as units comprising the old Thundering Herd posted a $12.7 billion profit. In 8:30AM Eastern economics 482,000 first time unemployment claims were filed last week, up 36,000 for their steepest increase in eight months. Though the figure includes Conan O'Brien, $40 million may mitigate the ego blow in his case. Leading economic indicators for last month and January's Philadelphia Fed Index are each out at 10:00AM. Reporting season continues with reports from Advanced Micro (AMD), American Express (AXP), Continental Airlines (CAL), Goldman Sachs (GS), Google (GOOG), Legg Mason (LM), Southwest Airlines (LUV), Union Pacific (UNP), UnitedHealth (UNH), and Xerox (XRX).

Initiations

Monsanto (MON): The ag stock is initiated with a Buy at Morgan Joseph ($100 target).

JM Smucker (SJM): Barclays starts JM Smucker at Equal Weight.

Vale SA (VALE): UBS initiates Vale SA with a Neutral and $34.24 price target.

Biotech: Jefferies picks up Myriad Genetics (MYGN) (Hold), Beckman Coulter (BEC) and Gen-Probe (GPRO) (both Buys). See also Evolution of Technology Leaves Affymetrix Behind.

Upgrades

Starbucks (SBUX): The coffee giant is raised to Buy from Hold with a $30 price objective at Deutsche Bank following the coffee company's above-consensus earnings. For more, see Seven Reasons Starbucks is Hot.

Colgate-Palmolive (CL): The stock is up ahead of the open after getting added to the Conviction Buy list at Goldman Sachs.

Diageo (DEO): RBS toasts Diageo with a Buy-from-Hold upgrade.

F5 Networks (FFIV): Bank of America/Merrill Lynch lifts F5 Networks (Buy from Neutral). See also Cisco, F5 Show Recovery Is Happening, Despite Washington.

Wells Fargo (WFC): FBR Capital increases Wells Fargo to Market Perform from Underperform.

Panera Bread (PNRA): The stock is upgraded to Strong Buy from Outperform at Raymond James.

Downgrades

Starbucks: The stock is reduced to Hold from Buy at Jesup & Lamont as they believe the risk/reward profile is now less attractive.

Morgan Stanley (MS): Keefe, Bruyette downgrades Morgan Stanley to Market Perform from Outperform and lowers their target price to $33 from $37 after earnings.

Nothern Trust (NTRS): Keefe also cuts Northern Trust to Market Perform from Outperform.

Boston Scientific (BSX): Sanford Bernstein takes Boston Scientific to Market Perform from Outperform.

Nisource (NI): Citigroup downgrades Nisource to Hold from Buy.

Blockbuster (BBI): The stock is now Neutral from Buy at Janney Montgomery Scott.

Prudential (PRU): The insurance company is cut to Hold from Buy at Citigroup.

Coach (COH): Luxury retailer Coach is removed from short-term buy list at UBS.
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No positions in stocks mentioned.
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