Annaly Capital Management Inc. (NYSE: NLY) Cut to Market Perform at FBR.
ArcelorMittal (NYSE: MT) Cut to Sell at S&P Capital IQ.
BP PLC (NYSE: BP) Raised Estimates by UBS; Cut to Hold at Soc-Gen.
CBOE Holdings, Inc. (NASDAQ: CBOE) Cut to Underperform at KBW.
Demand Media Inc. (NYSE: DMD) Cut to Underweight at Morgan Stanley.
Dr. Reddy’s Laboratories Ltd. (NYSE: RDY) Cut to Neutral at Credit Suisse.
ING Group, N.V. (NYSE: ING) Cut to Neutral at Goldman Sachs.
Morgan Stanley (NYSE: MS) Cut to Hold at Collins Stewart.
National Oilwell Varco Inc. (NYSE: NOV) raised target to $96 at Argus.
OpenTable Inc. (NASDAQ: OPEN) Cut to Perform at Oppenheimer; Cut to Neutral at Credit Suisse; Raised to Overweight at Piper Jaffray.
Sohu.com Inc. (NASDAQ: SOHU) lowered targets by Credit Suisse and Nomura.
UBS AG (NYSE: UBS) Cut to Sell at Deutsche Bank.
Vishay Intertechnology, Inc. (NYSE: VSH) Raised to Overweight at JPMorgan.
Yum! Brands Inc. (NYSE: YUM) Raised to Neutral at Goldman Sachs.

Credit Suisse makes a change to its favorite biotech list.

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JON C. OGG

Alcatel-Lucent SA (NYSE: ALU) Cut to Sell at Citigroup; Cut estimates and target at Argus.
American International Group Inc. (NYSE: AIG) named as Bear of the Day at Zacks.
Delek US Holdings, Inc. (NYSE: DK) named value stock of the day at Zacks.
Groupon, Inc. (NASDAQ: GRPN) Started as Buy at Benchmark.
The Home Depot Inc. (NYSE: HD) Raised to Outperform at RBC.
ING Groep NV (NYSE: ING) Cut to Hold at Soc-Gen.
Kellogg Co. (NYSE: K) Cut to Market Perform at William Blair.
Medivation, Inc. (NASDAQ: MDVN) Raised to Outperform as Bull of the Day at Zacks.
Pier 1 Imports, Inc. (NYSE: PIR) Started as Outperform at Wells Fargo.
Quest Diagnostics Inc. (NYSE: DGX) Raised to Outperform at RBC.
Toll Brothers Inc. (NYSE: TOL) Raised to Buy at Citigroup.
Veolia Environnement S.A. (NYSE: VE) Cut to Underweight at JPMorgan.
VeriFone Systems, Inc (NYSE: PAY) Started as Buy at Citigroup.
Western Gas Partners. L.P. (NYSE: WES) Raised to Outperform at Credit Suisse.
YRC Worldwide. Inc. (NASDAQ: YRCW) Maintained Underperform and target cut to $0.05 at Credit Suisse; maintained neutral with losing share at Zacks.

See the top analyst upgrades and downgrades of the prior week here. 

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JON C. OGG

Job losses at major banks continue. On the heel of layoffs by Nomura (NYSE: NMR) and Credit Suisse (NYSE: CS), Dutch banking and insurance firm ING (NYSE: ING) said it would fire 2,700 people. Among the primary causes for the action was a 467 million euro charge for its Greek debt holdings. Many more financial firms in the region have similar exposure. The downsizing of the industry in the region is not over.

Fed unemployment forecast increased. The Federal Reserve increased its three-year forecasts for unemployment and dropped its forecasts for GDP growth. The markets did not react to the news. They should have. Many economists assume that the central bank will use monetary policy to help the economy if it stumbles — a program that many call QE3. The problem is that interest rates are already near zero. It will be hard to do much more to help the economy beyond offering what is practically interest-free money.

News Corp. (NYSE: NWS) announced reasonably strong earnings. The media firm’s pillar of strength continues to be its cable operations, particularly Fox News. The creation of the network was a stroke of genius. It has more than offset revenue problems at the company’s other divisions — particularly the newspapers. The Murdochs may be under siege because of the London wiretapping scandal, but as long as Fox News remains popular with viewers, the company’s earnings should be protected.

Parent company of Filene’s Baseement files for bankruptcy. The weak retail economy took another victim. Discount retailer Syms Corp. (NASDAQ: SYMS) and its Filene’s Basement division filed for bankruptcy. The firm could not even come up with the capital to see if holiday sales could save it.  Syms Corp. is so badly battered that all of its stores will be closed.

Douglas A. McIntyre

The expanding Greek debt problem will trouble the G20 summit. (Reuters)

Groupon’s IPO may be a dollar higher than its $16 to $18 price range. (Reuters)

BNP Paribas takes at 2 billion euro write-down on Greek debt. (Reuters)

ING (NYSE: ING) to cut 2,700 people because of trouble with its Greece sovereign paper. (Reuters)

Apple (NASDAQ: AAPL) will offer a software update to help extend battery life in the iPhone 4S. (Reuters)

Amazon.com (NASDAQ: AMZN) starts a digital library book service. (Reuters)

The EU warns Greece that its place in the union could be threatened unless it immediately agrees to new debt provisions. (WSJ)

A judge allows Sprint-Nextel (NYSE: S) to challenge the AT&T (NYSE: T) deal to buy T-Mobile. (WSJ)

Aol (NYSE: AOL) posts a loss despite gains in ad revenue. (WSJ)

Qualcomm’s (NASDAQ: QCOM) net income rises sharply on sales of cellphones that use its products. (WSJ)

Economic data show that the eurozone has moved toward an economic downturn. (WSJ)

Drug makers try to reverse regulations that do not allow them to market pharma products for off-label use. (WSJ)

The head of Lexus in the U.S. says car sales will be weak this year. (WSJ)

News Corp. (NYSE: NWS) revenue rises because of improvements in it cable properties. (WSJ)

A study from Citizens for Tax Justice shows large companies still pay little in taxes. (NYT)

The EU suspends 8 billion euros in Greek aid while the future of austerity in the nation is tested. (FT)

Greece’s membership in the eurozone will be put to a vote by members. (Bloomberg)

Growth of China’s nonmanufacturing sector slows.

Douglas A. McIntyre

We have gone in and described each call, made other references, and provided color on each if applicable.  Again, having the “Top Research Call of the Week” status is not always a compliment nor is it always just bullish.

Capital One Financial Corp. (NYSE: COF) is one that scored with its winning acquisition of ING Direct.  The $9 billion price tag seems high, but now “What’s in your wallet?” went from the #8 bank to the #5 bank by deposits in America.  Our take is that this may set off a wave of smaller to mid-sized financial deals among those firms which are not burdened by Treasury oversight.  After the deal was confirmed, the stock was raised to “Buy” at SunTrust and a lesser upgrade came from S&P Equity Research to “Hold” from “Sell.”

Ctrip.com International Ltd. (NASDAQ: CTRP) was a bit odd because shares were initially up after the open with the broader market.  Still, Goldman Sachs cut its rating to SELL on the travel services outfit that is in China.  A competing call from ThinkEquity maintained an “Outperform” rating but it was the Sell rating that ruled the roost on Friday as shares closed down 0.7% at $39.95 against a 52-week trading range of $31.35 to $53.16.

National Bank of Greece SA (NYSE: NBG) was an example of a research call that was very late to the game as it had been under review for months and just now gotten to.  S&P decided in its infinite wisdom just now that the Greek banks might have some collateral damage with the Greek economy under debt restructuring fears and in the age of austerity.  The irony is that the ADR of NBG closed out the week higher than before the credit rating cut by S&P was issued.

Pandora Media, Inc. (NYSE: P) was a strange IPO and we called it a value hat trick game ahead of the open.  Our concern was not unwarranted.  After raising about twice as much as originally expected, Pandora was a classic “Gap & Crap” trade.  The underwriters cannot initiate coverage for 30 days, but a firm that was not in the underwriting called BTIG was able to cover it.  BTIG issued a SELL rating with a $5.50 target at BTIG.  There is a flip side call here… Maxim Group issued a “Buy” rating with a $23 price target.  Is there a paradox when a company called Pandora tanks as the Greeks riot?  Pandora is an example of the sins of the underwriting world.

Capital One will fund the $9 billion cash-and-stock deal with $6.2 billion in cash and the remainder in stock.  Capital One plans to raise some $2 billion in new equity capital and it will raise $3.7 in debt to meet capital requirements related to the transaction.

Here is what is amazing in the world of “Too Big to Fail”…. The acquisition elevates Capital One from eight place to fifth among US retail banks.  There is another deal that recently went off and that was where Regions Financial Corporation (NYSE: RF) basically acquired $1 billion in credit card assets.  The Regions deal is a tiny fraction compared to this one.

Before you get too excited and wonder which companies will next be acquired by Bank of America Corporation (NYSE: BAC) or J.P. Morgan Chase & Co. (NYSE: JPM), you need to remember two things.  Those banks are in the “Too Big To Fail” club and the only way regulators are going to ever approve any deals for those two is if they are the only ones which can bail out another big failed institution.  Jamie Dimon is not partial to more deals as far as we are concerned, and Bank of America is already above that 10% deposit cap so it cannot acquire more depository institutions.

Once identified largely as a credit card issuer, the transaction transforms Capital One into one of the largest retail banks in the country.  The company is also accomplishing this without wasting money by having branch locations at every major intersection around the United States as you see with the other “Too Big to Fail” banks.

Integral with the deal, Capital One gets ING Direct USA’s $92 billion in assets, of which $40 billion are mortgage loans, 7.7 million customers, and the organization’s penchant for gathering deposits.

Prospectively, Capital One expects to realize $90 million in cost savings from combining the two banks and $200 million annually as it scales back efforts to grow its deposit base.  Our take is that the cost savings may be tiny in comparison to the added growth that this brings Capital One.

As a result of the transaction ING will own a 10 stake in Capital One making it the largest shareholder. Before the effects of any added shares or added debt, Capital One has a market capitalization of roughly $22 billion.  At $48.75, its 52-week trading range is $36.10 to $56.26.  For whatever it is worth, this stock was above $80.00 before the meltdown turned into The Great Recession.

When Capital One advertises “What in your wallet?” you can think, ING.

Our take… When you consider what Capital One has accomplished here and when you consider the Regions deal, the banks that are not quite “too big to fail” are likely to increase their merger and acquisition strategies if the deals can come with cost synergies and generate accretive earnings opportunities.

Lastly, we are asked from time to time which companies in which sectors we think will make great takeover targets ahead.  Our pick on that front remains E*TRADE Financial Corporation (NASDAQ: ETFC).  With a market cap of just over $3 billion and brokerage accounts numbering close to 2.8 million, there is value there as it keeps seeing improved credit metrics that are left over from its days or trouble.  E*TRADE is also back to being profitable again and that is expected to remain the case ahead.

JON C. OGG

Bloomberg reported that GE was all-cash and that Capital One was a cash and stock bid, but this would effectively give control of the largest U.S. online bank.  GE had been trying to gear down its financial portfolio, so this could mark an end to Jeff Immelt’s contraction of the conglomerates financial portfolio.  Capital One already has substantial credit card business outside of its brick and mortar bank, and this would be one more step toward keeping its activities in higher margin operations.

It is ING’s more than $80 billion in deposits that is attractive.  This would effectively be cheaper access to capital.  Unfortunately, there is also about $40 billion in mortgage loans and nearly $20 billion in mortgage-backed securities that would have to be dealt with.

We have another take to consider if this comes to fruition.  If ING Direct does get acquired, then investors will have little choice but to focus attention back on E*TRADE Financial Corporation (NASDAQ: ETFC).  Charles Schwab Corp. (NYSE: SCHW) and TD AMERITRADE Holding Corporation (NASDAQ: AMTD) have both been named as likely suitors in the past for E*TRADE and now that E*TRADE is profitable again we think that a suitor could justify taking on the remaining red-line items that E*TRADE has been trying to pare down.

E*TRADE currently has a market capitalization of about $3.2 billion.  A $9 billion price tag for ING Direct might make E*TRADE come back in focus.

One caveat to consider…. Citigroup, Inc. (NYSE: C) was heavily reported on selling its online bank called Egg in the United Kingdom and earlier this year it sold its entire Egg credit card portfolio to Barclays Bank of Barclays PLC (NYSE: BCS) with over $3 billion in gross assets in the Egg portfolio representing about 1.15 million customer accounts.  We just saw a $1 billion in credit card assets acquired by Regions Financial Corp. (NYSE: RF) last night as well.

Maybe all of the reports and concerns about the future of bank profitability are overblown, or at least certain aspects of those bank operations.

JON C. OGG

Allied Irish Banks plc (NYSE: AIB) is down this morning after solid gains yesterday.  Today’s drop is nothing more than “related ongoing concerns over the bailout package after the short-term” and that has shares giving back.  AIB is down 7.2% at $3.34.

Ambac Financial Group, Inc. (NYSE: ABK) is trading lower in sympathy with MBIA; shares are down 4.67% at $1.43.

Cirrus Logic, Inc. (NASDAQ: CRUS) is trading higher this morning after a Cramer reference last night on MAD MONEY on CNBC as an Apple iPad and iPhone winner.  Shares are up 6.7% at $12.79 on almost 100,000 shares.

Fossil, Inc. (NASDAQ: FOSL) is trading up after it beat earnings with $0.53 EPS vs. $0.32 from Thomson Reuters consensus estimates.  It raised Q2 guidance to $0.32 to $0.34 EPS vs. $0.29 estimates and raised 2010 guidance.  Shares are up 5.6% at $37.86.

ING Group, N.V. (NYSE: ING) is down with ADRs from the E.U. as the bailout has “related ongoing concerns over the bailout package after the short-term”… Shares are down 6.5% at $8.26 on over 40,000 shares.

JA Solar Holdings Co., Ltd. (NASDAQ: JASO) is trading up after it reported $0.24 EPS per ADS on revenue of $279.2M, above the $0.18 and $265 million estimates from Thomson Reuters. The company also raised guidance for 2010 with shipments to exceed 1GW rather than 900MW previously offered.  Shares are up 5% at $6.75 on over 200,000 shares.

MBIA Inc. (NYSE: MBI) is trading lower this morning after posting a $1.48 billion loss of -$7.22 EPS after a $2.2 billion pre-tax unrealized loss on insured credit derivatives.  Revenue was down 13% to $1.77 billion.  Shares are trading down 13.4% at $8.08 versus a 52-week range of $3.19 to $10.92.

National Bank of Greece SA (NYSE: NBG) is down again, like most days.  After E.U. ADRs and markets sold off the bank was one of the major drops seen.  Shares are down over 5% at $2.91 after a $3.07 close yesterday.

Priceline.com Incorporated (NASDAQ: PCLN) is down over 10% after earnings last night.  The company beat earnings expectations.  Its guidance for Q2 failed to impress due to Iceland’s volcano woes and unrest in Thailand.  Shares are down 11.5% at $220.95 on thin pre-market trading volume.

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JON C. OGG

Sponsor: 26 Cheap Stocks to Sell – Cheap stocks have been on a tear recently, but nine out of ten stocks are circling the drain!

We have outlined the move on each, with a volume analysis and even a 52-week range with a note on the country and industry.

Allied Irish Banks plc (NYSE: AIB) in Ireland saw its banking ADRs rise 18.8% to $3.60 on 8.2 million shares.  That is not even 1.5-times normal volume.  52-week range is $2.35 to $10.42.

Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) in Spain saw its banking ADRs rise 19.7% to $12.36 on over 7.8 million shares, over 4-times normal volume.  52-week range is $9.36 to $19.78.

Banco Santander, S.A. (NYSE: STD) in Spain saw its banking ADRs rise by almost 23% to $12.09 on over 48 million shares, almost 7-times normal volume.  52-week range is $9.07 to $17.89.

The Bank of Ireland (NYSE: IRE) in Ireland, as if you didn’t guess, saw its banking ADRs rise 16.1% to $8.58 on 2.6 million shares.  Oddly, this is only about 50% above normal trading volume.  52-week range is $5.01 to $20.18.

Barclays plc (NYSE: BCS) of the U.K. saw its banking ADRs trade up 17.9% to $19.59 on 8.1 million shares, about 3-times normal volume.  52-week range is $14.45 to $25.68.

Daimler AG (NYSE: DAI) in German saw its auto-maker ADRs trade up 6.23% to $48.39 on 1.22 million shares, almost 1.5-times normal volume.  52-week range is $32.57 to $56.57.

ING Group, N.V. (NYSE: ING) saw its Dutch financial giant ADRs rise over 25% to $8.78 on 15.3 million shares, over 4-times normal volume.  The 52-week range is $6.78 to $18.89.

Koninklijke Philips Electronics NV (NYSE: PHG), or Philips Electronics, saw its Dutch diversified ADRs rise 11.2% to $32.30 on 4.1 million shares, about 3-times normal volume.  52-week range is $17.29 to $36.06.

Repsol YPF SA (NYSE: REP) saw its Spanish oil & gas ADRs trade up just under 12% to $22.19 on 1.88 million shares.  That is 3-times normal volume and the 52-week range is $19.08 to $28.65.

Siemens AG (NYSE: SI) saw its German diversified ADRs trade up 8.9% to $94.25 on 1.12 million shares, almost double normal volume.  52-week range is $63.67 to $103.10.

Telecom Italia SpA (NYSE: TI) rose a sharp 10.75% to $13.08 on 633,000 shares, more than double normal volume.  52-week range is $11.00 to $18.50.

There are of course only a few relative losers, and you might guess them based on history and based on the recent news off our own coast:

Alcatel-Lucent (NYSE: ALU) was one we were going to accuse of being a perpetual loser after its lackluster performance, but BP plc (NYSE: BP) is continuing to fight its demons and it was actually in the red.  Alcatel-Lucent closed up “only 3.57%” at $2.61 and its 52-week range is $2.01 to $4.95; BP closed down 0.6% at $48.75 on over 31 million shares.

There are many things to consider here.  First, part of the reason for the disparity being so different than the US versus 52-week highs is that there is a currency issue and then there is the notion that exposure (or location in) in the PIIGS nations only added pressure.  This bailout package was the equivalent of the TARP.

JON C. OGG

Best Buy Co. (NYSE: BBY) is holding up better than many might guess considering how much it has run up. This is after light earnings.

BioCryst Pharmaceuticals Inc. (NASDAQ: BCRX) is fairly close to 52-week highs after signing three partnerships for Peramivir for influenza outside the U.S.

Citigroup Inc. (NYSE: C) is down but only marginally on reports of a ‘possible’ stake sale by The U.S. Government.

Dendreon Corp. (NASDAQ: (DNDN) is giving back a portion of yesterday’s gains on merger rumors.

ING Group (NYSE: ING) will be an active ADR today after the EU may block a settlement.

Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) is surging as a top bio-winner after moving to Phase 2 clinical trial of LX4211 in patients with type 2 diabetes.

Yahoo! Inc. (NASDAQ: YHOO) is soaring to highs not seen since July on yet another upgrade.

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JON C. OGG
September 15, 2009