Wall to Wall Street Coverage: Upgrades and Downgrades
Let's hope Rip Van Winkle stuffed his money in his mattress in 2011, for were he to awake today after a 12-month slumber, our catnapping capitalist would wonder what all the fuss was about. The S&P 500 Index (^GSPC) started the year at 1,257 and change, and after the world's largest economy saw its debt downgraded, a nuclear tsunami and earthquake struck at the heart of the world's second largest economy. Europe endured Armageddon on a daily basis, China slowed ominously, dictators and dominoes dropped all across the Middle East, and Osama bin Laden, Kim Jong-il, and Colonel Gaddafi all blessedly kicked the bucket along with, tragically too young, the iconic founder of Apple (AAPL). Our benchmark stock index ended the year at…1,257 and change. In a year of many dodgy business decisions, we can toss a coin — the method by which Hewlett-Packard (HPQ) was named — to determine the silliest, but it was probably the tech titan awarding its ex-CEO Leo Apotheker over $25 million in severance for 11 months on the job, during which time the stock fell 40%. A study showed the wealth gap between old and young at its widest ever. And no wonder: Nabors Industries (NBR) gave its 81-year-old chairman $100 million in severance, even as he remained on the job. Warren Buffett, 81, had better years, as did Rupert Murdoch, aged 80. Youth should be better served in 2012, with 27-year-old Mark Zuckerberg set to launch a $10 billion public offering of Facebook.
A witty ditty goes: "And this is good old Boston, The home of the bean and the cod, Where the Lowells talk only to Cabots, And the Cabots talk only to God." The clan can certainly afford to — Cabot Oil & Gas (COG) was the top S&P 500 stock of the past 365 days and its only component to double. America's credit rating was cut for the first time since 1941, but it is also now a net exporter of petroleum-related products for the first time since 1949. A barrel of oil however, with Iran again acting up, remains above $100 and McDonald's (MCD) hit that lofty level itself for the first time in its history in leading all Dow (^DJI) stocks. The nominee for public printer of the United States can't get confirmed, which may be just as well as we can't keep printing money and expect to keep the bills at bay. And an Italian man, 99, filed for divorce from his wife, 96. The European Union, its angst amplified by Italy and others, may go the same way in 2012. Today in economics, November construction spending and December's Institute For Supply Management manufacturing index are each out at 10:00 a.m. Eastern, with minutes from the FOMC's December 13 meeting following at 2:00 p.m. On the corporate front, Progress Software (PRGS) is due to announce earnings.
Initiations:
Angie's List (ANGI): The recent IPO is picked up at Perform by both Oppenheimer, which assigns a $16 price objective, and RBC Cpaital. As of October 2011, the company had over one million members in 175 markets, but valuation appears full at current levels. Janney Montgomery Scott and ThinkEquity are both more bullish, assigning Buy ratings.
Advance Auto Parts (AAP): Deutsche Bank begins a Buy recommendation on AAP.
Clovis Oncology (CLVS): JPMorgan covers CLVS at an Overweight.
Pioneer Southwest Energy (PSE): The stock is a new Neutral at Bank of America-Merrill Lynch.
ProLogis (PLD): The REIT is initiated at an Outperform with Wells Fargo.
Bankrate (RATE): Goldman Sachs resumes Buy rated coverage on RATE.
Zynga (ZNGA): The much-hyped Internet IPO is assumed with a Market Perform at BMO Capital. See also The 10 Most Controversial Stocks of 2012.
Upgrades:
Cisco Systems (CSCO): The router company, a key Dow component, gets increased to Overweight from Neutral at JPMorgan. Also read Top 10 Tech Picks for 2012.
Chipotle Mexican Grill (CMG): Deutsche Bank hoists the fast food firm to Buy from Hold.
Altera (ALTR): Goldman gives ALTR a Buy-from-Neutral boost.
Micron Technology (MU): The semiconductor stock is taken to Overweight from Equal Weight at Barclays.
Under Armour (UA): The athletic apparel outfit is upgraded to Outperform from Neutral at Robert W. Baird, which takes its price target to $90 from $84. The brokerage is positive on overall momentum for the athletic market, the strength of UA's product pipeline, and a relatively enticing valuation.
American Eagle (AEO): The clothing company gets lifted by both Piper Jaffray (Overweight from Neutral) and Jefferies (Buy from Hold).
Ann Inc (ANN): Jefferies juices its rating on the firm, formerly known as Ann Taylor, to Buy from Hold.
Energizer (ENR): Morgan Stanley moves ENR up to Overweight from Equal Weight.
Jack In The Box (JACK): The fast food firm is upgraded to Top Pick from Outperform at RBC Capital.
V.F. Corp (VFC): Citigroup lifts the stock to Buy from Neutral.
Riverbed Technology (RVBD): Oppenheimer raises its RVBD recommendation to Outperform from Perform and establishes a price objective of $30. Recent channel checks on either side of the Atlantic indicate fourth-quarter sales should be encouraging and interest also appears to be increasing in the company's newer product offerings.
RPX Corporation (RPXC): The California-based risk management company is increased to Overweight from Equal Weight by Barclays.
Cyberonics (CYBX): Shares get a Buy-from-Hold boost at Kaufman Brothers, which raises its target price by $10 to $38. Likely 2012 catalysts include Potiga, used to treat partial-onset epileptic seizures.
Potash Corp of Saskatchewan (POT): The fertilizer company is upgraded to Positive from Neutral at Susquehanna.
Hologic (HOLX): The medical appliance firm is upgraded to Overweight from Equal Weight at Morgan Stanley.
Fusion-io (FIO): Morgan Stanley moves the stock to Overweight from Equal Weight.
TripAdvisor (TRIP): TRIP is taken to Buy from Neutral at Bank of America-Merrill Lynch.
Downgrades:
Chip stocks: Intel (INTC), a Dow member, and Applied Materials (AMAT) are each reduced to Equal Weight from Overweight by Barclays. For more, see Web Watch: Intel Pushes Its Ultrabook Concept.
American Tower (AMT): Shares are now Neutral from Overweight at JPMorgan.
Becton Dickinson (BDX): Morgan Stanley downgrades BDX to Underweight from Equal Weight.
CapitalSource (CSE): Sterne Agee cuts the small cap stock to Neutral from Buy.
Onyx Pharmaceuticals (ONXX): Jefferies cuts the stock to Hold from Buy. For related content, see January Catalysts for Biotech and Drug Stocks.
Goodrich (GR): GR gets downgraded to Hold from Buy at Jefferies, its shares no longer trading on fundamentals following a $16.5 billion takeover by Dow member United Technologies (UTX).
Tech stocks: SanDisk (SNDK) and PMC-Sierra (PMCS) are both now Neutral from Buy at Goldman, which moves Microchip (MCHP) to Sell from Neutral.
Group 1 Automotive (GPI): GPI gets downgraded to Neutral from Buy at Goldman.
Astoria Financial (AF): Sterne Agee takes the regional bank to Underperform from Neutral.
Cinema stocks: Carmike Cinemas (CKEC) and Regal Entertainment (RGC) are each reduced to Neutral from Overweight at Piper Jaffray.
PACCAR Inc (PCAR): JPMorgan lowers its rating to Neutral from Overweight.
Regency Centers (REG): REG is now Neutral from Outperform at Credit Suisse.
Healthsouth (HLS): Bank of America-Merrill Lynch lowers the shares to Underperform from Neutral.
St. Jude Medical (STJ): Kaufman Brothers pulls STJ from a list of Top Picks and takes $8 off its objective, to $42, mainly due to unwelcome distractions from the company's recalled Riata defibrillator.
Wolverine World Wide (WWW): Shares of the footwear firm are now Neutral from Outperform at Robert W. Baird, which trims its objective by $11 to $38. Concerns include potentially decelerating sales trends and orders being impacted by unfavorable weather.
Williams-Sonoma (WSM): The Pottery Barn owner is slashed to Sell from Neutral at Janney Montgomery Scott.
Zumiez (ZUMZ): Piper Jaffray reduces the retailer to Neutral from Overweight.
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