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Upgrades & Downgrades: Yum Brands Still Finger Lickin' Good


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

21 Jump Street or 11 Wall Street? Either made you money last week, although to be fair the film had two fewer days in which to do it. Still, the NYSE sits pretty after Dow Industrials (^DJI) rose above 13000 and the S&P 500 Index (^GSPC) advanced 2.43% to hit its highest level since May 2008. They did so even after Friday's report from the University of Michigan that consumer sentiment slid for the first time since August. (Hey, you'd also be a little low on confidence had the Boss confused you for Ohio.) Financials were once again at the forefront, with even Citigroup (C) gaining 7.8% despite failing the Federal Reserve's 'stress test'. Or did it? After all, our central bankers failed to include almost $40 billion in their calculations. Math is hard, so they may want to turn to Scholastic's (SCHL) Taylor Lautner for a little arithmetic lesson. The stock, which surged 13% on Thursday alone en route to a new nine-year high, can certainly afford to help out.

Linsday Lohan got into a scrape with her Porsche (POAHY.PK) yet the luxury car company still reported a 22% increase in annual earnings. Poor LiLo, she can't seem to catch a break but was waxing articulate on monetary policy via Twitter some nine months ago; Ben Bernanke and Co. have just now gotten in on the act. The Fed certainly needs to improve its communication, having once ham-handedly suggested that the iPad could cure inflation. Apple's (AAPL) third version of the device was unveiled at 8:00 am on Friday and half an hour later consumer prices surged to a ten-month peak, so no, I don't think so. And table tennis fan Greg Smith forgot the basics of ping pong diplomacy, quitting Goldman Sachs (GS) on the op-ed page of the New York Times (NYT). Mike Bloomberg quickly came to the beleaguered bank's rescue, saying "Most of the clients of the big firms are professionals. Buyers of mortgage securities were not little old ladies." We should be so lucky - an auction house just announced it is to sell off a multi-million dollar investment owned by a 104-year old lady. No top-tier economic data out today but Adobe Systems (ADBE) is due to report quarterly results.


YUM! Brands (YUM): The fast food firm, owner of KFC, Pizza Hut, and Taco Bell, is initiated with an Outperform at Oppenheimer, which establishes a price objective of $82. They are attracted to a unique business model that continues to shift toward emerging economies which boosts ROIC (return on invested capital). Also, company-specific tailwinds in China are powerful and appear uncorrelated to slowing GDP (gross domestic product.)

Alternative energy: Trina Solar (TSL) and Yingli Green Energy (YGE) are each initiated with Equal Weights by Barclays.

Education industry: American Public Education (APEI) and Bridgepoint Education (BPI) are both begun with Overweights at Barclays.

Intercontinental Hotels Group (IHG): Shares are started with a Sell at Société Générale.

Caesars Entertainment (CZR): The recent IPO is a Hold at both Deutsche Bank and KeyBanc Capital, which says 42% of its EBITDA (earnings before interest, taxes, depreciation, and amortization) comes from Las Vegas and 11% from Atlantic City, tying its fortunes heavily to these two markets.

Pandora Media (P) P is picked up with a Neutral at Credit Suisse, which has a $12 price target.

Roundy's Inc (RNDY): The stock is resumed with an Outperform at Robert W. Baird, which cites an expected dividend yield of 8.5% and track record of stable cash flow generation.


Colgate-Palmolive (CL): The consumer products powerhouse is upgraded an unusual 180 degrees, to Outperform from Underperform at Crédit Agricole.

DreamWorks Animation (DWA): DWA gets increased to Overweight from Neutral at Piper Jaffray.

E*TRADE (ETFC): Shares, up 14.17% last week, are moved to Outperform from Market Perform with Wells Fargo.

Gap Inc (GPS): The clothing company gets upgraded to Outperform from Market Perform by BMO Capital.

Sony (SNE): The Japanese consumer electronics giant is upgraded substantially, to Outperform from Underperform at Crédit Agricole.

United Parcel Service (UPS): UPS is now Overweight from Neutral at JPMorgan, which says its $6.85 billion deal for Dutch package delivery company TNT Express "is a significant positive and we anticipate favorable trends in UPS's core domestic package business".

Antofagasta plc (ANFGY.PK): The company is upgraded to Outperform from Neutral by BNP Paribas.

Abbott Labs (ABT): Deutsche Bank boosts the medical device maker to Buy from Hold.

Biomarin Pharmaceuticals (BMRN): Shares are now Buy from Hold with a $41 target at Brean Murray.

Charles Schwab (SCHW): The discount broker is now Buy from Neutral at Citigroup.

Capital One Financial (COF): Shares are boosted to Buy from Hold at Jefferies.

Energy equities: Devon Energy (DVN) gets upgraded to Buy from Neutral at Goldman Sachs, which adds SunCoke Energy (SXC) to its Conviction Buy list.

Ensco (ESV): The oil services outfit is increased to Overweight from Neutral at JPMorgan.

ENI S.p.A. (E): The Italian firm is now Outperform from Neutral at Credit Suisse.

Excel Maritime Carriers (EXM): The small cap stock is hoisted to Hold from Underperform at Jefferies.

NVIDIA (NVDA): NVDA is now Equal Weight from Underweight at Evercore.

Patriot Coal (PCX): Shares are up before the bell on the back of a Neutral-from-Sell boost by Goldman.

Subsea 7 SA (SUBCY.PK): The company is hoisted to Hold from Sell at Société Générale.

Steel stocks: Steel Dynamics (STLD) and Nucor (NUE) are each upgraded to Buy from Neutral at UBS.


eBay Inc (EBAY): The online auctioneer, trading at fresh multi-year highs, is now Neutral from Buy at Citi.

Sprint Nextel (S): Shares are lower before the bell on a downgrade to Underperform from Market Perform by Sanford Bernstein, which believes the next generation LTE iPhone will be badly disadvantaged on Sprint's network.

Arch Coal (ACI): The stock is slashed to Sell from Neutral at Goldman.

Alliant Techsystems (ATK): The world's largest maker of ammunition is now Underweight from Equal Weight at Barclays.

Cullen/Frost Bankers (CFR): CFR gets cut to Hold from Buy due to valuation with Wunderlich, whose objective is $60.

Energy sector: Apache Corp (APA) and Newfield Exploration (NFX) are each now Neutral from Buy at Goldman.

Rowan Cos (RDC): The oil services stock gets reduced to Neutral from Overweight at JPMorgan.

Munich Re (MURGY.PK): Shares are now Neutral from Buy at UBS.

Memsic (MEMS): MEMS is lowered to Hold from Buy at Needham, which says shares appear to be currently overbought.

Magyar Telekom (MYTAY.PK) The equity is moved to Underweight from Neutral at HSBC Securities.

ReneSola (SOL): SOL is reduced to Underperform from Market Perform at Macquarie

Vertex Pharmaceuticals (VRTX): Morgan Stanley moves the stock to Underweight from Equal Weight.

VimpelCom (VIP): VIP is now Neutral from Overweight with a $12.50 target at HSBC Securities, which notes that smartphones are getting cheaper by the day and hence affordability barriers constraining emerging markets users are disappearing.
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