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Stock Upgrades: Here's Why It Pays to Discover


Wall Street ratings agencies set the tone for today's stock market.

Who needs an iPod when broken records are all the rage? Another day, another 2.16% tumble in Apple (AAPL), but no matter, for the Dow (^DJI) rose to a record. Those last six words now accurately describe stock market action for six straight days.

Boeing (BA), upgraded this morning, added on another 1.47% to finish at a fresh half-decade high on reports in an Irish newspaper that Dublin's own Ryanair (PINK:RYAAY) is about to reveal a 200-airplane order. (If the latter is that flush with cash, surely they can relax their fee-to-pee policy. Although since so many post-Saint Patrick's Day bladders will be in desperate need of Guinness evacuation on Sunday, that is actually shaping up to be the highest grossing day in its history.)

Merrill Lynch (BAC) once famously had three different ratings on Merck (MRK) in a single day. Less is more; its single upgrade of the drug stock last week has sent it on such a run that yesterday shares surged more than 3% to best all blue chips by a mile.

A downgrade of Linux software leader Red Hat (RHT) saw it fall 4.78% in posting the S&P 500's (^GSPC) poorest performance. Linus Torvalds, inventor of the eponymous operating system, said, "Software is like sex: It's better when it's free." Many more performances like yesterday's and Red Hat's stock will soon cost nothing.

The pace of economic data, previously quiet this week, picks up with January business inventories due out at 10:00 a.m. Eastern. In earnings action, Adecco (PINK:AHEXY), Cathay Pacific Airways (PINK:CPCAY), Coldwater Creek (CWTR), E.ON (PINK:EONGY), Express (EXPR), Guess (GES), Kronos (KRO), Men's Wearhouse (MW), TravelCenters of America (TA), and Vera Bradley Inc. (VRA) are all expected to report results.

ABB Ltd. (ABB): The European industrial giant is now Buy from Neutral at Nomura.

Affiliated Managers (AMG): Goldman Sachs gives the money manager a Buy-from-Neutral upgrade.

Boeing (BA): BB&T Capital Markets moves the Dow (^DJI) member, trading at new half-decade highs, to Hold from Underweight.

Coach Inc. (COH): Citing renewed upscale consumer spending and a risk:reward ratio that is now better balanced, Citigroup boosts the handbag maker to Buy from Neutral with an intact objective of $56. Shares are currently up almost 2% in pre-market trading as a result.

Diamond Foods (DMND): Jefferies juices its investment opinion to Hold from Underperform on account of the company's margin improvement capability. The price objective, previously $11, is now $15.

Discover Financial Services (NYSE:DFS): Maybe there is indeed truth in advertising. Shares in the credit card company, already up 36.87% in the past year to stand atop a fresh peak, are moved to Outperform from Market Perform at FBR Capital. Secular transaction volume gains are seen arising from the shift of payment transactions from cash and check to plastic and electronic methods. The price target is also taken up, by $6 to $48.

DreamWorks Animation (DWA): The stock is now Hold from Sell at Stifel Nicolaus, which now has higher hopes for its movie Croods.

Genesco (GCO): GCO gets upgraded to Overweight from Neutral at Piper Jaffray, which hat-tips its impressive long term earnings ability. Its price objective increases to $73 from $62.

Oracle (ORCL): Canaccord raises its rating to Buy from Speculative Buy amid expectations that revenue at the hardware division will improve over upcoming quarters. Its price objective is $42, and shares are according edging up ahead of this morning's market open.

Prologis (PLD): The stock is now Outperform from Neutral at Cowen.

Republic Services (RSG): BB&T Capital hoists the waste management name to Buy from Hold.

Summer Infant (SUMR): Shares are now Strong Buy from Buy at Needham, which cites cost cutting efforts among other catalysts.

Walgreen (WAG): Impressed with its exposure to healthcare reform, UBS upgrades the stock to Buy from Neutral at UBS. Its target price is hiked to $48 from $41.

(See also: New Stock Coverage: Animal Spirits Are Alive and Well at Zoetis and Stock Downgrades: Toy Story Has Unhappy Ending for Hasbro.)
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