AGL Resources, Inc. (NYSE: GAS) named as Bear of the Day at Zacks.

Alcatel-Lucent SA (NYSE: ALU) Raised to Outperform at BMO.

America Tower Corporation (NYSE: AMT) Raised to Overweight at JPMorgan.

Anadarko Petroleum Corporation (NYSE: APC) Raised to Buy at Stifel Nicolaus.

Automatic Data Processing Inc. (NASDAQ: ADP) Maintained Buy with $60 target at Argus.

Chevron Corporation (NYSE: CVX) Maintained Outperform but lowered estimates at Credit Suisse.

Crown Castle International (NYSE: CCI) Cut to Neutral at JPMorgan.

General Electric Co. (NYSE: GE) Maintained Outperform at Credit Suisse.

Genuine Parts Co. (NYSE: GPC) named Bull of the Day at Zacks.

Health Management Associates Inc. (NYSE: HMA) Maintained Hold but cut estimates at Argus.

Juniper Networks Inc, (NYSE: JNPR) Cut to Market Perform at BMO.

Vodafone Group PLC (NYSE: VOD) Cut to Underperform at BNP Paribas.

ZAGG Inc. (NASDAQ: ZAGG) named value stock of the day at Zacks.

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JON C. OGG

The Andersons, Inc. (NASDAQ: ANDE) Maintained Buy as Value at Zacks.
Apollo Investment Corporation (NASDAQ: AINV) Cut to Neutral at JPMorgan.
Applied Materials Inc. (NASDAQ: AMAT) Started as Perform at Oppenheimer.
Bank of America Corporation (NYSE: BAC) Cut to Market Perform at Wells Fargo.
Boyd Gaming Corp. (NYSE: BYD) Raised to Neutral at Goldman Sachs.
Coinstar Inc. (NASDAQ: CSTR) Raised to Neutral at JPMorgan.
Exterran Holdings, Inc. (NYSE: EXH) Cut to Neutral at Credit Suisse.
First Solar Inc. (NASDAQ: FSLR) Cut to Hold at ThinkEquity.
Health Management Associates Inc. (NYSE: HMA) Cut to Hold at Argus.
KLA-Tencor Corporation (NASDAQ: KLAC) Started as Outperform at Oppenheimer.
LinkedIn Corporation (NYSE: LNKD) Cut to Equal Weight at Morgan Stanley.
Micron Technology Inc. (NASDAQ: MU) Started as Perform at Oppenheimer.
Potash Corp. of Saskatchewan (NYSE: POT) Raised to Outperform at Bull of the Day at Zacks.
Petrohawk Energy Corporation (NYSE: HK) Cut to Neutral at Credit Suisse.
Royal Caribbean Cruises (NYSE: RCL) Maintained Underperform as Bear of the Day at Zacks.
SanDisk Corporation (NASDAQ: SNDK) Started as Outperform at Oppenheimer.
Salesforce.com (NYSE: CRM) Raised to Outperform at Wells Fargo.
Symantec Corporation (NASDAQ: SYMC) Raised to Outperform at FBR.
VMware Inc. (NYSE: VMW) Raised to Outperform at Wells Fargo.

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JON C. OGG

Yesterday HCA posted second-quarter EPS of $0.43, down -35% from the same period a year ago, and badly missing forecast earnings of $0.59. Revenue rose, but still missed estimates. The report weighed down other stocks in the health care sector, included Tenet Healthcare Corp. (NYSE: THC), Health Management Associates Inc. (NYSE: HMA), Universal Health Services, Inc. (NYSE: UHS), LifePoint Hospitals, Inc. (NASDAQ: LPNT), and Community Health Systems Inc. (NYSE: CYH).

The HCA IPO came after it was quite clear that the brunt of the health care reforms passed into law last year would fall on insurers, not providers. But the fee-for-service system, on which hospital profits are based, are going to be revamped as well over the next several years. Because HCA employs relatively few physicians, it will have to begin hiring doctors in order to take advantage of some of the reform act’s new payment structure.

The company’s structural inadequacies were known and even referred to in the IPO prospectus. Perhaps they were not sufficiently considered by investors, but that’s a long term story.

HCA’s earnings report does note a drop in the complex surgeries that the company has relied on to boost revenues and profits. Instead, hospitals treated less severe cases that are not as costly.

The company also lowered its forecast for growth-adjusted earnings to a range of 3% to 5%, down from a prior estimate of mid-single-digit growth.

HCA should have been able to forecast that its business was going to undergo some change as a result of the health care reforms enacted last year. If insurers are going to pay less, then patients are going to forgo anything except critically needed treatment. It doesn’t take a rocket scientist to figure that out.

HCA, and its underwriters, could have been more explicit in describing the risk related to HCA’s business. Here’s what the prospectus claims:

“During periods of high unemployment, governmental entities often experience budget deficits as a result of increased costs and lower than expected tax collections. These budget deficits at federal, state and local government entities have decreased, and may continue to decrease, spending for health and human service programs, including Medicare, Medicaid and similar programs, which represent significant payer sources for our hospitals. Other risks we face during periods of high unemployment include potential declines in the population covered under managed care agreements, patient decisions to postpone or cancel elective and non-emergency health care procedures, potential increases in the uninsured and underinsured populations and further difficulties in our collecting patient co-payment and deductible receivables.”

That description is so generic that it resembles placebo. Inpatient and outpatient surgeries have been declining slowly since 2006 and reached their lowest point in 2010.

Another weight on HCA is the end of its lock-up period in September, when 383 million more shares of stock will be eligible for re-sale. The company issued around 124 million shares at its March IPO.

Health Management Associates reports earnings tomorrow, and if it has the same issue with surgeries that hit HCA, the whole hospital sector is in for another beating. If HMA avoids the issue, then HCA may fall even further on its own.

HCA shares posted a new post-IPO low of $26.96 in early trading today, but the shares have come back to around $27.89 at mid-day. The post-IPO high is $35.37.

Paul Ausick

Aeropostale, Inc. (NYSE: ARO) Raised to Hold at KeyBanc.
Broadcom Corporation (NASDAQ: BRCM) Raised to Outperform at Oppenheimer.
Campbell Soup Co. (NYSE: CPB) Cut to Underperform as Bear of the Day at Zacks.
Carnival Corp. (NYSE: CCL) Started as Neutral with $43 target at Credit Suisse.
Diamond Foods Inc. (NASDAQ: DMND) Cut to Hold at BB&T.
Health Management Associates Inc. (NYSE: HMA) Removed from Focus List at Credit Suisse.
KB Home (NYSE: KBH) Reiterated Hold at Argus; Maintained Underperform at Credit Suisse.
Louisiana-Pacific Corporation (NYSE: LPX) Cut to Neutral at Credit Suisse.
Quest Diagnostics (NYSE: DGX) Started as Outperform at Macquarie.
Royal Caribbean Cruises Ltd. (NYSE: RCL) Started as Outperform and $55 target at Credit Suisse.
SLM Corp. (NYSE: SLM) Cut to Neutral at Zacks.
Sprint Nextel Corporation (NYSE: S) Reiterated Outperform with $8 target at Credit Suisse.
Tesoro Corporation (NYSE: TSO) Maintained as Outperform as Bull of the Day at Zacks.
Texas Instruments Inc. (NYSE: TXN) Reiterated Buy and $40 target at Argus.
Time Warner Cable Inc. (NYSE: TWC) Reiterated Buy at Argus.
W.R. Berkley Corporation (NYSE: WRB) Cut to Neutral at BofA/ML.

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JON C. OGG

American Superconductor Corporation (NASDAQ: AMSC) Raised to Buy at Jefferies.
Automatic Data Processing, Inc. (NYSE: ADP) Raised to Neutral at Cowen & Co.
Baidu Inc. (NASDAQ: BIDU) Raised to Buy at Kaufman Bros. (most will say this is a very late call).
Health Management Associates Inc. (NYSE: HMA) Started as Neutral at Susquehanna.
Paychex Inc. (NASDAQ: PAYX) Raised to Neutral at Cowen & Co.
PetSmart (NASDAQ: PETM) Cut to Neutral at Janney Capital.
Sequenom Inc. (NASDAQ: SQNM) Raised to Buy from Hold at Lazard.
Saks Inc. (NYSE: SKS) raised to Overweight at JPMorgan.
Tiffany & Co. (NYSE: TIF) Raised to Buy at Jesup & Lamont
Williams-Sonoma (NYSE: WSM) Cut To Hold at Citigroup.

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JON C. OGG

NYSE stocks that are currently listed as being in possible short squeezes (not on news, but stocks with high short selling over the past five years and strong price performance) include Micron Technology Inc. (NYSE: MU), Corning Inc. (NYSE: GLW), Saks Incorporated (NYSE: SKS), Health Management Associates (NYSE: HMA) and Chesapeake Energy Corporation (NYSE: CHK).

• Micron (MU) beat estimates last week and now the shorts are on the run as the short position rose by 4,033,386 shares and the short ratio is at 3.42.
• Chesapeake Energy (CHK) is getting the benefit of the rise in the price of natural gas along with its short position that rose by 2,630,762 shares and the short ratio is at 1.71 which is not a significant as the other names but over the last year it is rising to a new high on its short ratio.

Short interest numbers for the NYSE are reported for the period of settlement date December 15th. The NYSE saw short interest increase to 13,534,278,885 from 13,181,274,622 (revised number) from an original number of 13,202,567,761. Our calculation shows an increase of 353,004,263 or 2.68%. There were 1,612 increases with 1,581 decreases.

Short interest numbers for NASDAQ are reported for the period of settlement date December 15th.  Short interest rose to 6.459,229,433 from 6,452,841,088 for an increase of 6,388,345 or 0.10%. There were 1,573 increases and 1,100 decreases.

Geoffrey A. Garbacz, GoodMorningWallSt.com

Abercrombie & Fitch (ANF) Raised to Outperform at FBR.
Dolby Labs (DLB) Raised to Overweight at JPMorgan.
Health Management (HMA) Raised to Buy at Deutsche Bank.
Lifepoint Hospitals (LPNT) Raised to Buy at Deutsche Bank.
News Corp (NWS) Raised to Overweight at JPMorgan.
Tenet Healthcae (THC) Raised to Buy at Deutsche Bank.
Whole Foods (WFMI) Raised to Outperform at RBC.
Yahoo! (YHOO) Raised to Overweight at Barclays.

JON C. OGG

• ABB (ABB) Cut to Neutral at Goldman Sachs.
• Barclays (BCS) Cut to Sell at RBS.
• Corn Products (CPO) Cut to Sell at Deutsche Bank.
• Cynosure (CYNO) Cut to Hold at Citigroup.
• F5 Networks (FFIV) Cut to Neutral at UBS.
• Goldcorp (GG) Cut to Neutral at JPMorgan.
• Health Management (HMA) Cut to underweight at Barclays.
• HSBC (HBC) Cut to Sell at RBS.
• Mobile TeleSystems (MBT) Cut to Equal Weight at Morgan Stanley.
• News Corp. (NWS) Cut to Neutral at UBS.
• Thomson Reuters (TRI) Cut to Neutral at JPMorgan.
• Viacom (VIA) Cut to Neutral at UBS.
• Vimpelcom (VIP) Cut to Equal Weight at Morgan Stanley.

Jon C. Ogg
January 16, 2009

Health Management Associates (HMA) Jumpy trading. No big news. Falls to $.80 from 52-week high of $.8.20.

Crosstex Energy (XTEX) No news. Continues several day sell-off. Down to $3.20 from 52-week high of $34.50.

List seems short, but markets are up 6%.

Douglas A. McIntyre

A study by a professor at New York University looked at 151 gifts over over $1 million between 2003 and 2005. According to The Wall Street Journal the study "finds that many donations to the family foundations occur just before sharp drops in the companies’ stock prices." The professor told the newspaper "I think the IRS would take a dim view of altering a date of a gift in order to get a bigger deduction."

Management mentioned in the article includes CEOs or past CEOs at Health Management (HMA) and MSC Industrial (MSM).

Douglas A. McIntyre