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Upgrades & Downgrades: Harley Riding High on the Hog


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

On the last day of winter neither snow nor rain kept investors from getting their check in the mail, and by the time Wells Fargo (WFC), whose stagecoaches started delivering letters in 1857, concluded a trading session that saw United Parcel Service (UPS) jump 3.44% on a $6.8 billion acquisition, stocks had scored their eighth advance in nine sessions. Truth be told, gains were slim but bourses still stand at new multi-year highs after Apple Inc (AAPL) announced a dividend that would have been unhinkable under Steve Jobs' leadership. Their shares subsequently rose 2.65% to close above $600 for the first time ever. Undeniably impressive, although it wasn't even the day's best payout-propelled performance from a stock named after a foodstuff. Domino's Pizza (DPZ) - unlike Apple, not a fruit, just a vegetable according to Congress - jumped 3.35% after declaring a $3 special dividend. Shares subsequently hit the highest level in the history of a firm founded in the innocent America of 1960. Gap Inc (GPS), founded in the altogether less innocent America of 1969, gaped up 2.72% to a fresh multi-year peak. The khaki-clothing company is currently incongruously honoring the ultimate Man in the Grey Flannel Suit, dapper Don Draper, whose story spans the Sixties. Meanwhile Mad Men owner Lions Gate Entertainment (LGF) surged some 7.87%.

In analyst action, an upgrade of Colgate-Palmolive (CL) took the 12-month return to 23.94% on a firm that has paid uninterrupted dividends since 1895, and sent millions of men to the dentist. (OK, perhaps Sofia Vergara extolling the virtues of dental floss bikinis should take some of the credit.) Father's little dividend continues to prove profitable for the babies of E*TRADE (ETFC), which followed last week's 14.17% surge with further 1.63% gain after an upbeat research recommendation. Apparently 15% of parents would willingly skip their child's birth to see the Super Bowl, but presumably the financial firm's tiny tots gets them off the hook. And Sprint (S) shares slumped 4.50% after an analyst called bankruptcy "a very legitimate risk." Remind you of anyone? This morning in economics, we'll have speeches from Treasury Secretary Tim Geithner at 10:00 a.m. Eastern and Fed head Ben Bernanke at 12:45 p.m. On the corporate front, expect earnings out of Aluminium Corp of China (ACH)< Cintas (CTAS), DSW Inc (DSW), FSI International (FSII), Jabil Circuit (JBL), Krispy Kreme Doughnuts (KKD), Oracle (ORCL), and Tiffany (TIF).


Lions Gate Entertainment (LGF): The Hunger Games distributor is initiated with an Overweight at JPMorgan.

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

Specialty chemicals companies: Something for everyone at Morgan Stanley, which starts Airgas (AIR) at Overweight, assigns an Underweight on Air Products (APD), and picks up Praxair (PX) at Equal Weight.

Fertilizer stocks: Agrium (AGU) is a new Neutral at Piper Jaffray, which picks up CF Industries (CF) at Overweight and assigns it a price objective of $230.

AtriCure (ATRC): Leerink Swann launches Outperform rated research on ATRC.

FX Alliance (FX): Shares are a new Neutral at Citigroup, Goldman Sachs, and JPMorgan.

Kimco Realty (KIM): The company is an In-Line at Imperial Capital, which sets it a $20 target price.

Rockwell Collins (COL): COL is covered with a Hold at KeyBanc Capital. The company is extremely well-positioned to benefit from increasing aircraft production rates, but it recommends waiting for a price pullback to perhaps the $50 level prior to purchase.


Adobe Systems (ADBE): Shares, slumping before the bell after last night's earnings announcement, are upgraded to Sector Perform from Underperform at RBC Capital.

Advertising companies: Clear Channel Outdoor (CCO) and Lamar Advertising (LAMR) are each upgraded to Above Average from Average at Caris & Company.

Harley-Davidson (HOG): The motorcycle outfit is upgraded to Outperform from Market Perform by BMO Capital, which also takes its target up by a substantial $21 to $60. It says "early-season sales have [likely] been robust, benefiting from an improving economy, high gas prices, and amenable weather." Shares are up ahead of the open as a result.

IAMGOLD (IAG): Macquarie hoists the bullion firm to Outperform from Neutral.

Diamond Offshore (DO): The oil services firm is now Neutral from Underperform at Macquarie.

Deutsche Lufthansa AG (DLAKY.PK): Shares get a Buy-from-Neutral boost at UBS.

InterXion (INXN) The stock is moved to Outperform from Market Perform with Wells Fargo.

OmniVision (OVTI): OVTI is now Buy from Hold with a $24 target at Needham, which cites higher estimates on iPad 3 momentum.

ARM Holdings (ARMH): Barclays boosts the stock to Overweight from Equal Weight.

Tesco (TSCDY.PK): The British grocery giant gets upgraded to Hold from Sell at ING Group.


Adobe Systems (ADBE): Shares, upgraded elsewhere this morning, are also slashed to Sector Perform from Outperform at Pacific Crest.

Domino's Pizza (DPZ): The fast food firm gets downgraded to Underperform from Neutral by Bank of America-Merrill Lynch.

Dole Food (DOLE): JPMorgan moves the stock to Neutral from Overweight.

Digital River (DRIV): DRIV is reduced to Sector Perform from Outperform at RBC Capital.

F5 Networks (FFIV): McAdams Wright Ragen reduces its recommendation to Hold from Buy with a $130 target price. The equity is up over 80% since its upgrade in August and is as such now fully valued.

Frontline (FRO): The tanker firm is taken to Underperform from Market Perform with Wells.

CA Technologies (CA): RBC Capital cuts the company to Sector Perform from Outperform.

Comerica (CMA): CMA gets moved to Market Perform from Outperform by Sanford Bernstein.

GenOn Energy (GEN): The small cap is slashed to Sell from Hold at Deutsche Bank

International Power (IPRPY.PK): The energy outfit is now Neutral from Buy at Nomura.

Public Service Enterprise Group (PEG): Deutsche Bank downgrades the utility to Hold from Buy.

Swisscom AG (SCMWY.PK): Shares are now Neutral from Buy at Nomura.

Ixia (XXIA): XXIA is downgraded to Hold from Buy with a $15 objective at Wunderlich after yesterday's unexpected CEO transition.

Cardiome Pharmaceuticals (CRME): The microcap is lowered to Market Perform from Outperform at Leerink Swann.

Kinder Morgan Inc (KMI): Bank of America-Merrill Lynch moves the oil and gas pipeline firm to Neutral from Buy.

United Parcel Service (UPS): The package delivery powerhouse is cut to Hold from Buy at Stifel Nicolaus.

Veeco Instruments (VECO): The tech company is reduced to Sell from Underperform at Crédit Agricole.

Webster Financial (WBS): WBS gets reduced to Sector Perform from Outperform at RBC Capital.

Zions Bancorp (ZION): The regional bank is moved to Market Perform from Outperform by Bernstein.
No positions in stocks mentioned.
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