Akamai Technologies, Inc. (NASDAQ: AKAM) Cut to Sell from Neutral at Citigroup.
AGL Resources Inc. (NYSE: GAS) Started as Underperform and named as Bear of the Day at Zacks.
Apple Inc. (NASDAQ: AAPL) Reiterated Buy with $460.00 price target objective by Argus; maintained Conviction Buy List and target raised to $550 from $520 at Goldman Sachs.
ARM Holdings PLC (NASDAQ: ARMH) Started as Underperform at Bernstein.
Barnes Group Inc. (NYSE: B) named as value stock of the day at Zacks.
Costco Wholesale Corporation (NASDAQ: COST) Cut to Underperform at Bernstein.
Exxon Mobil Corporation (NYSE: XOM) Reiterated Buy at Goldman Sachs.
First Industrial Realty Trust (NYSE: FR) Cut to Neutral at Credit Suisse.
Hilltop Holdings, Inc. (NYSE: HTH) Raised to Outperform as Bull of the Day at Zacks.
Integra LifeSciences Holdings Corp. (NASDAQ: IART) Cut to Hold at Argus.
International Game Technology (NYSE: IGT) Removed from US Focus List at Credit Suisse.
Merck & Co. Inc. (NYSE: MRK) Downgraded to Hold at Jefferies.
Pandora Media Inc. (NYSE: P) Started as Buy at Needham.
Penn National Gaming Inc. (NASDAQ: PENN) Added to the US Focus List at Credit Suisse.
PVH Corporation (NYSE: PVH) Started as Buy at Stern Agee.
The Royal Bank of Scotland Group plc (NYSE: RBS) Raised to Neutral at JPMorgan.
Southern Copper Corporation (NYSE: SCCO) Cut to Hold at Deutsche Bank.
Thoratec Corporation (NASDAQ: THOR) Cut to Market Perform at Wells Fargo.

If you enjoyed the top analyst upgrades and downgrades, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We also include additional research notes, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Amazon.com Inc. (NASDAQ: AMZN) Raised to Outperform at William Blair.
Amgen Inc. (NASDAQ: AMGN) Maintained Neutral and $59 target at BofA/ML.
AT&T Inc. (NYSE: T) Raised to Outperform at Bernstein.
Bank of America Corporation (NYSE: BAC) Removed from Priority List at Wells Fargo.
Baker Hughes Inc. (NYSE: BHI) Raised to Buy at UBS.
Chimera Investment Corporation (NYSE: CIM) Cut to Neutral at Stern Agee.
ConocoPhillips (NYSE: COP) Reiterated Outperform and raised target to $93 at Credit Suisse.
E-Commerce China Dangdang Inc. (NYSE: DANG) Cut target and estimates at Goldman Sachs.
Hanger Orthopedic Group (NYSE: HGR) Raised to Outperform as Bull of the Day at Zacks.
3M Co. (NYSE: MMM) Reiterated Buy and $104 target at Argus.
Micron Technology Inc. (NASDAQ: MU) Reiterated Outperform and $15 target at Credit Suisse; Maintained Buy with $14 target at Auriga.
Nicor, Inc. (NYSE: GAS) Maintained Hold at Argus.
Rangold Resources Limited (NASDAQ: GOLD) Reiterated Buy with $110 target at BofA/ML.
Skechers U.S.A. (NYSE: SKX) maintained Underperform as Bear of the Day at Zacks.
Verso Paper Corp. (NYSE: VRS) Raised to Outperform at Credit Suisse.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Nicor shareholders will receive cash and stock valued at $53.00 per share and the company will have some 4.5 million distribution customers.  After the merger is complete, AGL holders will hold 67% of the combined NewCo.  The enterprise value of the combined entity will be approximately $8.6 billion.  AGL Resources further noted that it expects to become a Fortune 500 company.

The combined company is expected to have approximately $5.1 billion in annual revenues and EBITDA of $1.1 billion.  It will hold seven regulated natural gas distribution companies providing natural gas service to approximately 4.5 million customers in Illinois, Georgia, New Jersey, Virginia, Florida, Tennessee and Maryland, with a rate base of $3.8 billion. It is also going to have more than 1 million retail customers in the unregulated businesses.

Nicor shareholders will be entitled to receive for each share of Nicor common stock, $21.20 in cash and 0.8382 shares of AGL Resources common stock.  As far as whether or not a higher price may come to Nicor holders, keep in mind that this is effectively an all-time high.

Nicor’s pre-adjusted value at this $53.00 comes to what appears to be an all-time high.  The problem is that the stock component can influence that ‘all time high’ status and that seems to be what we are seeing.  Nicor shares are up 5.9% at $49.50 versus a 52-week range of $37.99 to $48.47.  AGL Resources is down about 3.2% at $35.95 and its 52-week trading range is $34.26 to $40.08.

JON C. OGG

Alcoa (AA) Raised to Overweight at JPMorgan.
Aqua America (WTR) Raised to Outperform at Baird.
Beckman Coulter (BEC) Raised to Overweight at Barclays.
California Water (CWT) Raised to Outperform at Baird.
Chartered Semiconductor (CHRT) Raised to Neutral at HSBC.
China Telecom (CHA) Raised to Overweight at Morgan Stanley.
Nicor (GAS) Raised to Outperform at Baird.
Nokia (NOK) Raised to Outperform at Credit Suisse.
Piedmont Natural Gas (PNY) Raised to Outperform at Baird.
Watson Wyatt Worldwide (WW) Started as Buy at SunTrust Robinson Humphrey.

-JON C. OGG

Fourth quarter EPS was $1.05, compared with analysts’ estimates of $0.67, and EPS for the year was $2.63, compared with estimates of $2.27. Compared with 2007 earnings, Nicor’s fourth quarter is down by 14% and the full year is down by 12%.

The company is seeking a rate increase in Illinois, and a preliminary ruling has proposed an increase to the rate base of 7.57% ($68.8 million), which was less than the 9.27% ($140.4 million) that Nicor had sought. The company expects a final ruling by March 25th, after the state has a chance to review comments.

Nicor’s outlook for 2009 depends “significantly on the gas distribution business’ pending rate case.” The company estimates 2009 EPS of $2.45-$2.65, if the rate case is finalized at the currently proposed rate. The lowered outlook for 2009 “reflects lower expected results in the company’s gas distribution and shipping businesses and higher results in its other energy-related businesses.”

Nicor shares opened nearly 7% higher this morning, at $31.44. Go figure.

Paul Ausick
February 25, 2009

Nicor reported EPS of $0.03 on revenue of $440.3 million. Analysts hadbeen expecting EPS of $0.13 on revenue of $421 million. Operatingincome fell from $22.8 million in the same period last year to $9.3million for the third quarter. Net income fell from $14.5 million tojust $1.3 million.

The company attributes the sharp decline to "lower operating revenuesand higher operating costs." How did they ever figure that out?

The company affirmed its estimates for 2008 earnings of $2.20 to $2.40, which is unchanged from earlier guidance.  But the mid-point there is under the consensus estimate of $2.36 and the low-end of the range is under all of the few available estimates seen.

Nicor’s share price closed at $46.21 on Friday, off 11% from its 52-week high set on September 18th.

Paul Ausick
November 3, 2008

Be advised that this new outlook assumes current fuel prices remain at their current levels.The company has reduced its planned capital investments by $400million, to $2.6 billion for fiscal 2009.  Shares traded up 4% to$88.70 in the immediate after-hours trading session.  United ParcelService Inc. (NYSE: UPS) also rose $3.2% to $67.18 on the FedEx news.

Jon C. Ogg
September 9, 2008

The prevailing wisdom has been that oil supplies are ample in places like Saudi Arabia and Kuwait. The kings and princes who run those countries just wanted to hold back shipments to keep prices high. That thinking is changing. The IEA “is preparing a sharp downward revision of its oil-supply forecast,” according to The Wall Street Journal. By way of turning modest hope into hopelessness, the analysis also points out that big oil producing countries are spending much less on exploration.

The thought that oil could move closer to $200 may not be so misguided.

Dirty energy is coming back into vogue. According to The New York Times, “in Japan (coal) production has jumped to its highest in nearly four decades.”

In Beijing there are days when the sun is barely visible. Smog hangs over the city, most of it from coal and wood burned for heat and energy. The Chinese central government has tried to clean some of that up for the Olympics. It has not worked entirely. A number of athletes won’t be showing up for the games. They claim the air quality it too poor. But, China drags on oil like an old man does on a cigarette. What does not kill him makes him stronger.

The US has an abundance of coal. Mining is becoming more profitable as oil prices rise and demand for anthracite soars. A little pollution could go a long way to cut dependence on oil.

The 1986 problems at Chernobyl put the West off nuclear energy. Having citizens who glow in the dark did not seem worth having cheap and abundant energy. The US does not build nuclear plants anymore. When oil hits $150, the sentiment about that may change. The government may even look at granting incentives to energy companies who want to put a carrier-class plants next to a big cities.

Energy alternatives which seemed unimaginable just months ago are starting to look like beauty queens. Solar and ethanol will not be able to replace oil, at least not for years. With uranium and coal, it is a different matter.

Douglas A. McIntyre

First Energy Corp. (NYSE:FE) today reported first quarter earnings of $276 million, or $0.91 EPS, compared with earnings of $290 million and $0.92 EPS for the same period in 2007. First quarter revenues totaled $3.3 billion, better than analyst estimates of $3.14 billion and $0.85 EPS. First Energy noted that high fuel costs and higher costs for purchased power reduced EPS by $0.19.

Earlier this week, CH Energy Group Inc. (NYSE:CHG) reported that revenues increased by more than 19%, but net income declined by about 4% and EPS decreased by about 4%. The company’s chairman and CEO had this to say: "Higher energy supply costs are resulting in higher total bills, inducing our customers to conserve, and sales volumes are noticeably affected." In other words, people turn down the heat in an effort to save money, and it costs the utilities money.

So what do utilities do? They go to their state public utility regulators and ask for rate hikes. First Energy has sought a rate increase in  Ohio of $340 million. Central Hudson is seeking an unspecified rate increase during the summer. Ameren Corp (NYSE:AEE), which will report earnings tomorrow, is seeking rate annual increases of 12.1% ($251 million annually) in Missouri and $247 million in Illinois.

The blame for the rate hikes resides largely with rising fuel costs. Coal prices have nearly doubled in the past year, and average natural gas prices at the wellhead have increased by about 25%. The utilities have a point. But they are also seeking increases to their regulated return, usually by about 1%-2%. State regulators so far are not impressed. Last year, Ameren requested a rate hike of $361 million in Missouri, which state regulators trimmed to a recommended $43 million. Both the company and government officials in Missouri are appealing the ruling. The company because the recommended increase is insufficient; the government, because it is too high.

Allegheny Energy, Inc.’s (NYSE: AYE) Potomac Edison Co., has also filed a request with the
Virginia State Corporation Commission for recovery of the cost of purchasing power for its Virginia customers.  It is asking for the recovery of a minimum of $73 million for the 12-month period beginning July 1, 2008, which would boost customer electric bills by about 29% if certain costs can’t be mitigated.

Nicor Inc. (NYSE: GAS) has also filed with the state of Illinois to pass on higher gas costs to its 2.2 million northern Illinois customers.  The rate hike request will add about $4.60 per month to the average residential electric bill, which would take effect in spring 2009.  While the company is saying this isn’t due to the cost of gas because Nicor buys on wholesale and passes on to customers without any mark-up, but this is "for the cost of delivery to the homes and businesses."  Delivery, material…. six of one, half a dozen of the other.

Higher gas prices, higher coal prices, and higher raw materials and transportation costs are going to be influencing residence and business utility bills.  If you think this is bad, wait until potable water shortages become more and more prevalent.  Higher utility bills are on the way, probably across the country and beyond.

Paul Ausick
May 1, 2008