Philip Morris (NYSE: PM) was upgraded to Outperform from Neutral at Credit Suisse.
Friedman Billings upgraded shares of Principal Financial (NYSE: PFG) to Market Perform from Underperform as they believe the company's capital buffer could keep outrunning credit losses.
Friedman Billings also upgraded Office Max (NYSE: OMX) to Outperform from Market Perform. The firm believes the risk of recourse to Office Max from the Timber Notes formerly backed by Lehman is low and that any litigation by noteholders will have a low level of success.
Citigroup upgraded CF Industries (NYSE: CF) to Buy from Hold on valuation following the recent weakness but lowered their target to $113 from $128.
Analog Devices (NYSE: ADI) was upgraded to Buy from Neutral at Merrill Lynch.
TheStreet.com's Jim Cramer says with gas coming down further, the coming rally could be broad and fierce.
The great hurricane fakeout leaves us with oil much lower than it began, having launched itself from $112. Now that the $110 level's been breached and natural gas has gone as low as $7.50, we can begin to put together a holiday scenario that might -- just might -- explain the incredible run in retail that's been going on.
The presumption in retail, if you use Wal-Mart (NYSE: WMT) (Cramer's Take) as retail, was that once the stimulus wore off, presumably last month, the stocks would get hammered. On Aug. 7, Wal-Mart as much as told you that, and the stock dropped to $57 from $60.90.
Ever since then, it has been creeping up. Kohl's (NYSE: KSS) (Cramer's Take) dropped a point from that warning, going from $45 to $44. It is now at $49. Macy's (NYSE: M) (Cramer's Take) went from $19.80 to $18.90 before bouncing to $20.82. Jones (NYSE: JNY) (Cramer's Take) went from $17.40 to $17.20 before roaring to $19.80. Ralph Lauren (NYSE: RL) (Cramer's Take), because of a great quarter, didn't even get hurt, rallying from $67 to $75.
Polo Ralph Lauren Corporation (NYSE: RL) is engaged in the design, marketing, and distribution of apparel, accessories, home furnishings and fragrances. These are offered under such brand names as Polo Ralph Lauren, Safari, Black Label, Club Monaco and Rugby. The company operates over 300 Ralph Lauren, Club Monaco, and Rugby retail stores, as well as a pair of e-commerce sites. Its products are also carried by upscale and mid-tier department stores. Macy's (NYSE: M) and Dillard's (NYSE: DDS) account for more than a third of all wholesale revenue. Jones Apparel Group (NYSE: JNY) and Liz Claiborne (NYSE: LIZ) are competitors.
The company pleased investors late last month, when it reported fiscal Q4 EPS of $1.00 and revenues of $1.24 billion. Analysts had been looking for 65 cents and $1.15 billion. Management also guided FY09 EPS to $3.95-$4.05 ($3.97 consensus). Needham subsequently reiterated its "buy" rating on the shares and boosted its price target to $79.
MOST NOTEWORTHY: ComScore, Duke Realty, Nordstrom and Sun Healthcare were among today's noteworthy upgrades:
ComScore (NASDAQ: SCOR) was upgraded to Outperform from Perform at Oppenheimer to reflect the strong Q1 report and strong customer additions.
Duke Realty (NYSE: DRE) was upgraded to Outperform from Market Perform at Wachovia upgraded based on valuation.
Nordstrom (NYSE: JWN) was upgraded to Outperform from Neutral at Credit Suisse.
Sun Healthcare (NASDAQ: SUNH) was upgraded to Outperform from Market Perform at Friedman Billings based on valuation and notes the Medicare rate cuts will be as drastic as feared.
OTHER UPGRADES:
MedAssets (NASDAQ: MDAS) was upgraded to Buy from Neutral at Piper, which thinks the company's acquisition of Accuro will strengthen its revenue cycle management offering, and the firm believes the tight credit markets make the company's MedAssets a compelling product in the short-term. In addition, Piper notes that the company has recently had success with large hospital systems.
Jones Apparel (NYSE: JNY) was upgraded to Buy from Neutral at Merrill citing sales expectations for the l.e.i. brand at Wal-Mart (NYSE: WMT) and margin improvements from leaner inventories.
Affiliated Computer (NYSE: ACS) was upgraded to Buy from Hold at Jefferies based on valuation and expectations for better bookings.
So I'm looking at Liz Claiborne (NYSE: LIZ) and its latest earnings report. I don't currently have a retailer in my portfolio, so I'm thinking to myself, hey, maybe I'll want to buy Liz after I check out its latest numbers. Well, that didn't happen.
Net sales (excluding discontinued operations) dropped 3% for the fourth quarter, and adjusted net income declined dramatically, coming in at $0.20 per diluted share -- last year at this time, the metric was over four times as big at $0.94. For the year, net sales dropped over 1% (excluding discontinued operations), and adjusted net income was $1.30 per diluted share -- yet another huge drop, considering that Liz Claiborne took in $2.99 per diluted share of adjusted net income in 2006. Oh, and there are other things here that will make any prospective investor shudder -- operational cash flow was down, the dividend was stagnant, and the margins weren't anything to write home about. And comps at some of the company's stores have been challenged (Juicy Couture, however, did report a strong 25% increase in comparable sales in the fourth quarter).
This was an easy one for me -- I'll stay away from Liz Claiborne. The company, which competes with the likes of Jones Apparel Group (NYSE: JNY) and Polo Ralph Lauren (NYSE: RL), currently exists in the land of strategic reviews, cost reductions, and discontinued operations. I don't want to travel to such a land with this particular business.
Disclosure: Steven Mallas owns none of the companies mentioned.
Jones, still executing its restructuring plan, said its fourth-quarter net loss narrowed to $89.8 million, or $1.06 per share, from $269.5 million, or $2.51 per share, last year. Without the gain on the sale of its high-end department-store chain, Barneys New York, and other costs, net income was nine cents per share, beating the seven cents per share analysts had been expecting.
Jones, which exited several lines during the quarter and along with the rest of the market suffered from weak holiday shopping season, posted a 17% decline in revenue to $838.5 million from $1.01 billion last year. Analysts expected revenue of $874.8 million. To get a better feel for the retailer's performance during the quarter, same-store sales fell 4.8%.
TheStreet.com's Jim Cramer says that next to the consumer, this is the biggest problem facing the otherwise strong companies in this sector.
Doesn't it seem like another day where it is impossible to make money? We have earnings season without any sense that anybody's numbers can be raised. We have an ennui that comes from months of pounding and indecision, and we have stocks that can't seem to go up to save their lives.
Even after all the recalls there are a slew of toys that are going to be hot sellers this year. See what toys the are and where you can get them for less money.
Credit-card issuers are trying a new tack to build loyalty among cardholders who know they can maximize benefits by using one at the grocery store and another at the gasoline pump. The plan: more flexibility and payment choices.
Yes, America needs a recession. Bernanke and Paulson won't admit it. And investors hate them. We're all trapped in outdated 1990s wishful thinking about a "new economy" and "perpetual growth."
It used to be heiresses just lunched, shopped and partied. Don't tell the $20 billion babies on Forbes' list of the 20 Most Intriguing Billionaire Heiresses, who defy the stereotype of the bon-bon popping princess thanks to achievements in business, sports and the arts.
Want an Armani cell phone? Nokia's very cool 8800 Sirocco? Well fughedaboutit. These are among hot cell phones that you cant get in the U.S. See other phones you can't here and see why the mobile phone you want exists somewhere other than the
Dogfish Head: Brewing Up Relationships
The beermaker employs an off-center approach to everything, including its flavors, grassroots marketing, and wacky promotions.
Jones Apparel Group Inc. (NYSE: JNY) shares are rising today after the company's Q3 earnings release. Earnings skyrocketed to $3.97 per share, up from $0.56 in the year-ago period, thanks to a hefty income tax benefit and other one-time gains. Revenues fell 5% but still exceeded analysts' expectations. Excluding one-time items, the company's adjusted EPS was $0.51, ahead of analysts' expectations of $0.34. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JNY.
After hitting a one-year high of $35.54 in January, the stock fell to a 52-week low of $16.73 in August. JNY opened this morning at $22.94. So far today the stock has hit a low of $19.70 and a high of $23.08. As of 10:35, JNY is trading at $20.07, up $0.37 (1.9%). The chart for JNY looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $17.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just 3 months as long as JNY is above $17.50 at January expiration. Jones would have to fall by more than 13% before we would start to lose money.
MOST NOTEWORTHY: Radian Group (RDN), Heelys (HLYS), Sonus Networks (SONS), Leap Wireless (LEAP) and MetroPCS (PCS) were today's noteworthy downgrades:
Radian Group (NYSE: RDN) was downgraded to Hold from Buy with a $23 target at Citigroup on concerns over the company's potential merger with MGIC Investment (MTG).
Heelys (NASDAQ: HLYS) was downgraded to Neutral from Outperform at Baird, to Hold from Buy at Brean Murray, to Neutral from Overweight at JP Morgan, to Sector Performer from Outperformer at CIBC and to Market Perform from Outperform at Wachovia following the company's FY07 guidance which was well below the consensus.
Sonus Networks (NASDAQ: SONS) was downgraded to Sell from Neutral at Merriman, as the firm believes there are a number of concerns that are not reflected in shares, including a flat N-T revenue outlook, a cut in 700bp in gross margins and a sharp uptick in receivable days, among other things.
LeapWireless (NASDAQ: LEAP) and MetroPCS were both downgraded to Hold from Buy at Citigroup, as they believe the break in subscriber momentum will last for 6-9 months. Wachovia downgraded Leap Wireless to Market Perform from Outperform citing mixed Q2 results and weak Q3 guidance.
OTHER DOWNGRADES:
UBS removed Coca-Cola (NYSE: KO) and Coach (NYSE: COH) from its Strategic Stock Selection List.
Jones Apparel (NYSE: JNY) was downgraded to Sell from Neutral at Merrill Lynch.
The value of luxury retailing chain Barneys New York, currently owned by Jones Apparel Group (NYSE: JNY), just got a little steeper. Over the weekend, Japan's Fast Retailing Company said it would pay $950 million to acquire the Barneys chain. Since July 5, Fast Retailing has been trying to beat out Dubai investment group Istithmar, which originally offered $825 million for the chain but has since upped its bid to $900 million.
The latest offer is 15% higher than Istithmar's original acquisition price and nearly 140% above what Jones paid to buy-out Barneys in December 2004.
Jones Apparel officials have responded by saying Istithmar has two business days to respond with an offer that, according to a statement published by the Associated Press, is "at least as favorable to Jones as the amended Fast Retailing offer." If Jones decides to deal with Fast Retailing, it will owe the Dubai suitor a $22.7 million break-up fee.
Jones shares have dropped more than 2% today to hit a new 52-week low of $19.79. The stock may be continuing to real from its disappointing earnings report last week.
Friedman Billings believes Symantec's (NASDAQ: SYMC) fundamentals are about to show significant improvement over the next year and upgraded shares to Outperform from Market Perform.
JP Morgan raised OfficeMax (NYSE: OMX) shares to Overweight from Neutral on valuation.
Qwest (NYSE: Q) was upgraded to Sector Outperformer from Sector Performer, expecting revenue growth to be driven by the improving enterprise business. JP Morgan added Qwest to its Focus List.
Metlife (NYSE: MET) was upgraded to Buy from Neutral at Merrill, based on valuation...
OTHER UPGRADES:
ValueClick (NASDAQ: VCLK) was upgraded to Sector Perform from Underperform at Pacific Crest.
Penn West (NYSE: PWE) was upgraded to Sector Perform from Underperform at RBC Capital.
Friedman Billings upgraded Cubic (AMEX: CUB) to Market Perform from Underperform.
Morgan Stanley upgraded shares of Jones Apparel (NYSE: JNY) to Equal Weight from Underweight.
Broadcom (NASDAQ: BRCM) was raised to Sector Outperformer from Sector Performer at CIBC.
The market spent most of the day in the red, but shot up in the last hour to close in the green. The NYSE had volume of 4.1 billion shares with 1,398 shares advancing while 1,906 declined for a gain of 18.55 points to close at 9,573.05. On the NASDAQ, 2.9 billion shares traded, 1,263 advanced and 1,810 declined for a gain of 7.6 to 2,553.87.
In options there were 9.0 million puts and 7.2 million calls traded for a put/call open interest ratio of 1.25. Bristol-Myers Squibb (NYSE: BMY) saw heavy volume on the December 32.50 calls (BMYLZ) with over 52,000 options trading. ALCOA Inc. (NYSE: AA) saw heavy volume on the August 47.50 calls (AAHW) with over 35,000 options trading. Valero Energy (NYSE: VLO) saw heavy volume on the August 75 calls (ZPYHO) with over 34,000 options trading. General Motors Corp. (NYSE: GM) saw heavy volume on the September 32.50 puts (GMUZ) with over 53,000 options trading.
The CBOE S&P 500 Volatility Index (NASDAQ: $VIX) saw heavy volume on the August 25 calls (VIXHE) with over 55,000 options trading. The CBOE Volatility Index is a measure of option volatility and effectively a fear index of the market. The VIX jumped from 15.00 area in the beginning of July to a recent reading of 23.67 (see chart). The index being up indicates that there is still fear in the market. The heavy call option activity at the 25 strike represents a bet that fear will increase or a large insurance policy against further market downturns.
Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about.
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Analyst upgrades:
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The value of luxury retailing chain Barneys New York, currently owned by 
The market spent most of the day in the red, but shot up in the last hour to close in the green. The NYSE had volume of 4.1 billion shares with 1,398 shares advancing while 1,906 declined for a gain of 18.55 points to close at 9,573.05. On the NASDAQ, 2.9 billion shares traded, 1,263 advanced and 1,810 declined for a gain of 7.6 to 2,553.87.
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