Wall to Wall Street Coverage: Upgrades and Downgrades
Who writes these scripts, Central Casting? Steven Spielberg on opium couldn't have concocted yesterday's stock market plot line. In its infinite wisdom, an already struggling NYSE asked our friends from Athens to ring the closing bell, adding Greek Day to an ominous enough sounding Global Domino's Day. Duly tempted, fate needed no extra excuse to wreck havoc and shares skidded on renewed concerns that what started in Athens is destined to cascade around the world. Equities endured their worst single session since late November with Dow Industrials, though the sole major index still positive for the week, falling for the first day in four. They dropped 198 to finish at 11,997; fittingly there are three nines in that line, for it was Germany saying nein nein nein to an expanded bailout deal that caused much of the consternation in equities. Elsewhere Jon Corzine was subpoenaed to testify on the eighth-biggest bankruptcy in U.S. history by the House Committee on Agriculture, ostensibly an odd choice of officiator for a financial matter but one that became increasingly appropriate with each bit of bull tossed its way. The ex-Goldman (GS) head was unfortunately unable to say where MF Global's (MFGLQ.PK) missing money went. Ideally, something so precious as $1.2 billion should have been safely ensconced in a bank vault which never opens, nestled inside a five-foot high safe, and ringed by railing, but alas in America we only employ such stringent security measures for truly priceless items such as soda.
So instead Corzine said "I simply do not know where the money is, or why the accounts have not been reconciled," adding of customers still waiting to be reimbursed, "Their plight weighs on my mind." That his copy of Accounting for Dummies went criminally unread was evidently one key factor behind John Wiley & Sons (JW-A), publisher of the cranium challenged series, tumbling 2.76% after announcing yesterday its fiscal Q2 earnings missed expectations. On a day that was enough to turn an ex-governor of the Garden State — and indeed Europe itself — to drink, an astute analyst upgraded New Jersey-based vodka seller Central European Distribution Corp (CEDC), helping to send its shares up 18.20%. Ahead of this weekend's last lunar eclipse of the year, the dark days show no signs of abating for the biggest solar stock, with SunPower Corp (SPWR) sliding 3.02% to another new low of $6.43; this erstwhile Icarus traded at $164 in 2007. And another hundred people just got off of the train. Apple Inc (AAPL), saved from bankruptcy by Bill Gates, opens a store today in Grand Central Station, saved from bulldozers by Jackie Onassis. Also this morning, analysts expect the University of Michigan's preliminary consumer sentiment survey to tick up at 10:00 a.m. Eastern.
Initiations:
Biopharmaceutical stocks: Barclays assigns Overweights on, among others, Dow component Johnson & Johnson (JNJ), Biogen Idec (BIIB), Celgene (CELG), and Vertex Pharmaceuticals (VRTX). Its Equal Weights include Amgen (AMGN), Allergan (AGN), Forest Labs (FRX), Human Genome Sciences (HGSI), and Teva Pharmaceutical (TEVA). For more, see Five Biotech Stocks to Watch Going into Big Doctors' Meeting.
Yahoo (YHOO): The Internet outfit is initiated with a Market Perform by BMO Capital.
Sirius XM Radio (SIRI): Citigroup starts SIRI at a Buy, setting a $2.20 price target on the small cap stock.
Sears Holdings (SHLD): Shares are initiated with an Underperform rating and $6 long term price objective at Imperial Capital. An underfunded pension plan and rapidly deteriorating operating performance will continue to weigh on performance.
JDS Uniphase (JDSU): UBS begins JDSU at a Buy.
Office supply-related stocks: MeadWestvaco (MWV) is initiated with an Outperform and $36 price objective at Robert W. Baird. The broker believes Mead is an under-appreciated franchise within the packaging sector after a wholesale portfolio reshaping over the past decade. Baird has a Hold on United Stationers (USTR) on account of its already fair Price/Earnings valuation of 12 times the 2012 earnings estimate, which is in line with the five-year average. ACCO Brands (ABD) gets assigned a Buy and $13 target price, catalysts including opportunity to drive market share gains and expense reduction.
Healthcare Information Services: Jefferies begins Buy rated coverage on Allscripts-Misys Healthcare (MDRX) and has Holds on Quality Systems (QSII) and AthenaHealth (ATHN).
Questcor Pharmaceuticals (QCOR): Leerink Swann launches Outperform rated coverage on QCOR.
Molycorp (MCP): ThinkEquity rolls out Hold rated coverage on the producer of rare earth oxides.
Acme Packet (APKT): APKT is assigned an Outperform with Wells Fargo.
Synergetics (SURG): Shares are begun with a Buy and $8 objective with Wunderlich. An improving balance sheet positions the company to be opportunistic on the acquisition front.
SandRidge Energy (SD): Deutsche Bank has a Hold on SD.
Upgrades:
YUM Brands (YUM): The owner of KFC, Pizza Hut, and Taco Bell is upgraded to Outperform from Market Perform by Sanford Bernstein. For related content, see For McDonald's, a Post-McRib Hangover Is Unlikely.
Alcatel-Lucent (ALU): Sanford Bernstein also raises its rating on the French telecom firm to Outperform from Market Perform, sending shares up ahead of the opening bell.
Ensco (ESV): The oil services outfit is now Buy from Neutral at Citigroup.
MEMC Electronics (WFR): Brokerage Collins Stewart gives the tech stock a Buy-from-Neutral boost. It believes a recent share price slide does not fully take into account the inherent value of its solar wafer business or Italian polysilicon operations.
Pepco Holdings (POM): Shares are now Outperform from Neutral at Credit Suisse.
Validus Holdings (VR): Bank of America-Merrill Lynch lifts the property and casualty insurance company to Buy from Neutral.
Downgrades:
Abbott Labs (ABT): ABT gets lowered to Equal Weight from Overweight by Barclays.
Costco (COST): The big box retailer is now Negative from Neutral at Susquehanna.
Mosaic (MOS): JPMorgan moves MOS to Neutral from Overweight.
Diamond Offshore (DO): Citi downgrades DO to Neutral from Buy.
Siemens AG (SI): The German industrial giant gets cut to Neutral from Overweight at JPMorgan Cazenove. Concerns include an "above-average exposure to Europe, governments and end-markets with increased competitive risks."
France Telecom (FTE): Shares are taken to Reduce from Neutral at Nomura.
EXACT Sciences (EXAS): Piper Jaffray reduces its rating to Neutral from Overweight.
Invesco Mortgage Capital (IVR): The stock is moved to Market Perform from Outperform at FBR Capital, which is also trimming its target by $4 to $16 after another substantial, and unexpected, dividend cut.
T. Rowe Price (TROW): Stifel Nicolaus takes TROW to Hold from Buy based on valuation.
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