American International Group (NYSE: AIG) Reiterated Buy with $40 target at BofA/ML.

Comerica Incorporated (NYSE: CMA) Cut to Sell at Citigroup.

CNO Financial Group, Inc. (NYSE: CNO) Started as Buy with $9 target at Goldman Sachs.

Deere & Co. (NYSE: DE) Reiterated Buy with $104 target at BofA/ML.

Dril-Quip, Inc. (NYSE: DRQ) named as Bear of the Day at Zacks.

Google Inc. (NASDAQ: GOOG) Reiterated Buy with $730 target at Argus.

Huntington Bancshares Incorporated (NASDAQ: HBAN) Started as Neutral at Citigroup.

Jefferies Group, Inc. (NYSE: JEF) Raised to Buy at Rochdale Securities.

KeyCorp (NYSE: KEY) Raised to Buy at Citigroup.

NVIDIA Corporation (NASDAQ: NVDA) Started as Buy at Cantor Fitzgerald.

Oriental Financial Group Inc. (NYSE: OFG) named as value stock of the day at Zacks.

Panera Bread Company (NASDAQ: PNRA) Started as Outperform with $190 target at Credit Suisse.

Pandora Media, Inc. (NYSE: P) Started as Underweight at Barclays.

Public Service Enterprise Group Inc. (NYSE: PEG) Reiterated Buy with $40 target at Argus.

Regions Financial Corp. (NYSE: RF) Started as Neutral at Citigroup.

URS Corporation (NYSE: URS) Reiterated Underperform with $49 target at BofA/ML.

Veolia Environnement (NYSE: VE) Cut to Sell at Deutsche Bank.

Zumiez, Inc. (NASDAQ: ZUMZ) named as Bull of the Day at Zacks.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox.  We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

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JON C. OGG

The unofficial closing bells put the DJIA down nearly 69 points to 13,170.19 (-0.52%), the NASDAQ fell more than 4 points (-0.14%) to 3,074.15, and the S&P 500 fell -0.30% or more than 4 points to 1,405.52.

There were several analyst upgrades and downgrades today, including ARM Holdings plc (NASDAQ: ARMH) raised to ‘overweight’ at Barclays; Harley-Davidson Inc. (NYSE: HOG) raised to ‘outperform’ at BMO; United Parcel Service (NYSE: UPS) cut to ‘hold’ at Stifel Nicolaus; Kinder Morgan Inc. (NYSE: KMI) cut to ‘underperform’ at BofA/ML; and Apple Inc. (NASDAQ: AAPL) reiterated ‘buy’ and target prices raised to $740 and $700 at Sterne Agee and Credit Suisse, respectively (more coverage here).

Earnings reports since markets closed last Friday have led to some price changes as of the last half hour of trading today: First City Financial Corp. (NASDAQ: FCFC) is down -10.4% at $8.92; JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up 4.4% at $1.90; Jefferies Group Inc. (NYSE: JEF) is up 1.9% at $19.43; NuPathe Inc. (NASDAQ: PATH) is down -13.3% at $3.90; and Tiffany & Co. (NYSE: TIF) is up 6.8% at $73.37 (our coverage here). After the markets close today, Oracle Corp. (NASDAQ: ORCL) and Krispy Kreme Doughnuts Inc. (NYSE: KKD) are scheduled to report earnings.

Other standouts from today include the following stocks:

Recon Technology Inc. (NASDAQ: RCON) is up nearly 82% at $4.09 after setting a new 52-week high of $4.58 earlier today. The Chinese oil field services company has cleared up its problems with Nasdaq and signed some new contracts for the first half of the year. More coverage here.

NewLead Holdings Ltd. (NASDAQ: NEWL) is up nearly 34% at $1.67. The shipping company cancelled a reverse stock split. More coverage here.

Targacept Inc. (NASDAQ: TRGT) is down about -30% at $5.17. The drug maker will not seek FDA approval for a new anti-depressant. More coverage here.

The US Commerce Department found the Chinese guilty of dumping solar panels in the US and has hit back with tariffs of 2.9% to 4.73% on solar panel imports. More coverage here.

Stay tuned for Wednesday. Federal Reserve Chairman Ben Bernanke is giving a speech. We have also noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Banker’s Association purchase applications
• 10:00 a.m. – Existing home sales
• 10:30 a.m. – EIA weekly petroleum status report

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Paul Ausick

This will be an important report, but the verdict now is that Jefferies should be able to get its growth back ahead.  The firm is not a bank, so it is not going to be hamstrung like many of its Wall Street rivals.  The firm has also been able to selectively add on strong asset gatherers who just couldn’t take working for some of the large bulge bracket firms that were in so much trouble or under so much scrutiny.

Thomson Reuters has estimates of $0.29 EPS and $699.2 million in revenues.  With shares around $19.10, the 52-week trading range is $9.50 to $25.81.

JON C. OGG

The 24/7 Wall St. Top Analyst Calls of the Week were in shares of the following: AT&T Inc. (NYSE: T); Automatic Data Processing, Inc. (NYSE: ADP); Best Buy Co., Inc. (NYSE: BBY); Chesapeake Energy Corporation (NYSE: CHK); Dendreon Corporation (NASDAQ: DNDN); E*TRADE Financial Corporation (NASDAQ: ETFC); J.C. Penney Company, Inc. (NYSE: JCP); J.P. Morgan Chase & Co. (NYSE: JPM); Goldman Sachs Group Inc. (NYSE: GS); Morgan Stanley (NYSE: MS); Jefferies Group, Inc. (NYSE: JEF); KLA-Tencor Corporation (NASDAQ: KLAC); Life Technologies Corporation (NASDAQ: LIFE); McDonald’s Corporation (NYSE: MCD); Michael Kors Holdings Limited (NYSE: KORS); Netflix, Inc. (NASDAQ: NFLX); Vistaprint NV (NASDAQ: VPRT); and Zynga Inc. (NASDAQ: ZNGA).

We have covered these in more detailed summaries below and some of these will have links to broader coverage calls.  

AT&T Inc. (NYSE: T) has been a bit under pressure and frankly its earnings did not help the situation for the bulls despite some positive metrics.  Now there is a bit more caution as the stock was reinstated in coverage on Friday at Credit Suisse: with a NEUTRAL and a mere $30.00 price target. This was one of Jim Cramer’s 4 FAVORITE DJIA PICKS FOR 2012 and it is the highest yield of the DJIA. 

Automatic Data Processing, Inc. (NYSE: ADP) met its second quarter earnings estimates this last week but apparently there are some valuation concerns despite the CFO seeing some continued positive trends in the economy.  On Thursday there were two downgrades: Cut to NEUTRAL at Citigroup and Cut to MARKET PERFORM at Wells Fargo.  Shares were around $57.oo pre-earnings and ended the week down at $55.34 and that may be another failed break-out attempt on the chart as the year high is $57.10.

Best Buy Co., Inc. (NYSE: BBY) is supposed to be down and out with absolutely nothing going for it.  In fact, its real risk is that no one under 30 or so may ever go there again.  Not so fast, according to Credit Suisse as the firm reinstated coverage with an OUTPERFORM rating and with a call of almost 30% upside to its $32.00 price target (versus $28.21 target from Thomson Reuters. This drove shares up 1.7% on Friday when the broad market was down.

Chesapeake Energy Corporation (NYSE: CHK) is the pure-play when it comes to investing in natural gas.  It is no secret that nat-gas is in the tank.  Apparently J.P.Morgan just couldn’t take the pressure any longer.  The analyst team there cut Chesapeake to UNDERWEIGHT on Thursday… That is just a “Sell” masqueraded by vocabulary.

Dendreon Corporation (NASDAQ: DNDN) was given two calls of caution or at least calls with no enthusiasm despite its shares having more than doubled from the lows.  Zacks maintained a NEUTRAL rating with a $14.00 target, while the team at Cantor Fitzgerald started it with only a HOLD rating.  Both calls came on Wednesday and Wednesday’s was Dendreon’s highest price of the week.

E*TRADE Financial Corporation (NASDAQ: ETFC) is still supposed to be a buyout target according to the great analyst predictions of 2012, even though the company’s review ended with nothing.  Earnings stank up the joint and the promise (or forecast) of exceptionally low rates through 2014 offers no comfort for earnings at online brokers.  The stock was cut to NEUTRAL at Goldman Sachs this week.  Keep in mind that Goldman Sachs was the firm hired to go find a buyer for E*TRADE.  Not promising at all.

Agrium Inc. (NYSE: AGU) Cut to Sector Perform from Outperform at RBC Capital Markets.
Banco Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX) named as value stock of the day at Zacks Investment Research.
Genworth Financial Inc. (NYSE: GNW) Downgraded to Underperform from Neutral at Zacks Investment Research.
HSBC Holdings PLC (NYSE: HBC) maintained Underperform but also named as Bear of the Day at Zacks Investment Research.
Jefferies Group, Inc. (NYSE: JEF) Cut to Hold from Buy by Meredith Whitney (Late-Wednesday call).
Micron Technology, Inc. (NASDAQ: MU) Maintained Buy with $11 target at Stern Agee; maintained as Outperform at Credit Suisse.
Norfolk Southern Corporation (NYSE: NSC) maintained Outperform as Bull of the Day at Zacks Investment Research.
Potash Corp. of Saskatchewan (NYSE: POT) Raised to Outperform from Sector Perform at RBC Capital Markets.
Saks Inc. (NYSE: SKS) Downgraded to Neutral from Outperform at Zacks Investment Research.
VIVUS, Inc. (NASDAQ: VVUS) Cut to Neutral from Buy at Roth Capital; Maintained as Outperform at Credit Suisse.

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JON C. OGG

BorgWarner Inc. (NYSE: BWA) Started as Buy at Stern Agee.
CenturyLink, Inc. (NYSE: CTL) Raised to Outperform as the Bull of the Day at Zacks Investment Research.
Chesapeake Granite Wash Trust (NYSE: CHKR) Started as Neutral at Goldman Sachs; Started as Market Perform at Wells Fargo.
Citi Trends, Inc. (NASDAQ: CTRN) maintained long-term Underperform as the Bear of the Day at Zacks Investment Research.
Energy XXI (Bermuda) Limited (NASDAQ: EXXI) named as Value stock of the day at Zacks Investment Research.
Ford Motor Co. (NYSE: F) Started as Buy at Stern Agee.
Honeywell International Inc. (NYSE: HON) Reiterated Buy with $70.00 price target at Argus.
InterMune Inc. (NASDAQ: ITMN) maintained Outperform but cut price target down to $20.00 from $37.00 at Credit Suisse.
Jefferies Group, Inc. (NYSE: JEF) Cut to Market Perform at Keefe Bruyette & Woods.
J.P. Morgan Chase & Co. (NYSE: JPM) Cut to Neutral at Stern Agee.
Oracle Corporation (NASDAQ: ORCL) Cut to Hold from Buy at Canaccord Genuity; maintained Outperform but cut price target to $40.00 from $42.00 at Credit Suisse.
Research in Motion Ltd. (NASDAQ: RIMM) Raised to Buy from Hold but price target is only $16.00 at ThinkEquity.
Teradata Corporation (NYSE: TDC) Cut to Perform from Outperform at Oppenheimer.
Watson Pharmaceuticals Inc. (NYSE: WPI) maintained Buy with a price target objective of $78.00 per share at Argus.

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The unofficial closing bells put the DJIA up nearly 336 points to 12,101.92 (2.85%), the NASDAQ rose more than 80 points (3.19%) to 2,603.73, and the S&P 500 rose 2.98% or nearly 36 points to 1,241.22.

There were several analyst upgrades and downgrades today, including AT&T Inc. (NYSE: T) cut to ‘neutral’ at JPMorgan. Other ratings actions today include F5 Networks Inc. (NASDAQ: FFIV) cut from ‘perform’ to ‘underperform’ at Oppenheimer; Urban Outfitters Inc. (NASDAQ: URBN) raised from ‘outperform’ to ‘Top Pick’ at FBR Capital; Amgen Inc. (NASDAQ: AMGN) added to ‘Strong Buy List’ at Zacks; and Baxter International Inc. (NYSE: BAX) lowered from ‘Top Pick List’ to ‘outperform’ and target price lowered from $61 to $58 at RBC Capital Markets.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: ConAgra Foods Inc. (NYSE: CAG) is up 4% at $26.18; General Mills Inc. is down about -1% at $39.19; Navistar International Corp. (NYSE: NAV) is up nearly 7% at $39.05; Sanderson Farms Inc. (NASDAQ: SAFM) is down -4% at $48.66; and Jefferies Group Inc. (NYSE: JEF) is up more than 22% at $14.46. After markets close today we get earnings from Nike Inc. (NYSE: NKE) and Oracle Corp. (NASDAQ: ORCL). See our 360 coverage on Oracle here and coverage of the ConAgra and General Mills reports here.

Other standouts from today include the following stocks:

Targacept Inc. (NASDAQ: TRGT) is down more than -35% at $5.01, after posting a new 52-week low of $4.92 earlier in the day. The pharmaceutical maker’s anti-depressant drug, developed in conjunction with AstraZeneca plc (NYSE: AZN) has failed a late-stage trial.

Cobalt International Energy Inc. (NYSE: CIE) is up nearly 38% at $13.81. The oil & gas exploration company has signed a production-sharing agreement for a block offshore of Angola. Cobalt owns 40% of the project and is the operator.

Canadian Solar Inc. (NASDAQ: CSIQ) is up nearly 33% at $2.93. The solar panel maker has sold about 86 megawatts of generation to TransCanada Corp. (NYSE: TRP) for approximately $455 million.

Prestige Brand Holdings Inc. (NYSE: PBH) is up nearly 21% at $11.27. The drug and cleaning supplies company paid $660 million for a selection of nonprescription drugs from GlaxoSmithKline PLC (NYSE: GSK).

Hovnanian Enterprises Inc. (NYSE: HOV) is up more than 18% at $1.50. The home builder is riding the wave of good news about new housing starts.

CVS Caremark Corp. (NYSE: CVS) is up about 9% at $39.85, after posting a new 52-week high earlier of $39.86. The healthcare company raised fiscal year guidance and boosted its quarterly dividend by 30%, to $0.1625/share.

Stay tuned for Wednesday. The most widely anticipated report for tomorrow is due at 8:30 a.m. from the National Association of Realtors, which will be revising its new home sales data from 2007 forward. Lower sales of up to -13% are expected. Here are other noteworthy events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications
• 10:30 a.m. – EIA weekly petroleum status report
• 1:00 p.m. – 7-year Treasury note auction

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Paul Ausick

Net revenues were $554 million, or $534 million excluding accounting items, down from $680 million a year earlier and against $562.36 million expected by the Thomson Reuters consensus estimate.

The company referred to the quarter as challenging with continued global volatility “compounded by a November filled with a barrage of misinformation about Jefferies.”

The brokerage firm also reported that its reduced its total balance sheet by nearly one quarter.  The firm’s leverage dropped to 9.9x from 12.9x.  The claim is that competitive and legislative forces continue to evolve in ways that favor its own client-focused model.
As of November 30, 2011, its various book values per share were listed as follows:

• Common book value per share $16.35
• Adjusted book value per share $15.48
• Tangible common book value per share $14.40
• Adjusted tangible book value per share $13.74 

Jefferies shares closed down at $11.80 on Monday and shares are indicated up 5% at $12.40 in the trading reaction on Tuesday morning.  Even if Jefferies is better off than many of the big banks, today’s market will treat book value as implied ceilings rather than implied floors in the share prices.

JON C. OGG

It still feels as though calculating a bank’s book value is a bit like calculating the cash per share of an emerging biotech that just experienced an implosion due to a poor drug candidate’s test result. The value may be eroded through time.  Now that earnings season has passed. 24/7 Wall St. has run a screen of the money-center banks, large broker-dealers, and super-regional banks trading at or under book value from the last quarter under the FinViz screen.

J.P. Morgan Chase & Co. (NYSE: JPM) now trades around $25.30 and its October earning’s book value was listed as $45.93 per share, up from $44.77 one quarter earlier and versus $42.29 a year earlier.

Bank of America Corporation (NYSE: BAC) is almost embarrassing, or actually it is embarrassing.  After a 2% drop to $5.36 today, BofA’s tangible book value per share in October was $13.22 versus $12.91 a year earlier and compared to $12.65 in the second quarter.  The stated book value per share was $20.80 in the third quarter, down from $21.17 a year earlier and up from $20.29 in the second quarter of 2011.

Citigroup, Inc. (NYSE: C) is another large discount to book value and the $24.60 price compared to a stated book value $60.56 per share and a tangible book value per share of$49.50.

Wells Fargo & Company (NYSE: WFC), Warren Buffett’s favorite bank, used to trade at a premium to book value but that now trades at 0.93-times its most recently stated book value.

A screen at FinViz gave some key banks that are large and well-known institutions, some of which have no exposure to Europe and/or the PIIGS to speak of, which are trading at a discount to their stated book value.  Others screened from FinViz are as follows, and these banks are all expected to be profitable on an operations basis ahead:

The trust and fiduciary banks are also at discounts.  BB&T Corp. (NYSE: BBT) trades at 0.88-times its latest book value.  The Bank of New York Mellon Corporation (NYSE: BK) trades at 0.66-times its latest book value. 

Other regional and large banking outfits are at large discounts too… Capital One Financial Corp. (NYSE: COF) trades at 0.64-times its latest book value.  Fifth Third Bancorp (NYSE: FITB) trades at 0.81-times its latest book value.  The Goldman Sachs Group, Inc. (NYSE: GS) trades at 0.64-times its latest book value.  Morgan Stanley (NYSE: MS) trades at 0.64-times its latest book value.  Jefferies Group, Inc. (NYSE: JEF) is just about to have a quarter-end but it trades at 0.64-times its latest book value.  PNC Financial Services Group Inc. (NYSE: PNC) trades at 0.78-times its latest book value.  SunTrust Banks, Inc. (NYSE: STI) trades at 0.47-times its latest book value.

As a reminder, our take is that even if the market were to suddenly recover, tangible book values would be the first line to watch and stated book value would be much later after that.  The book value game is one that looks and feels shockingly cheap today because the sector’s earnings power is being challenged each and every day.  Until the climate moves beyond winding down prop-trading, not going for many loans, not being able to earn money in the short-term and intermediate-term fixed income markets, and a climate where these are sued over and over for actions of yesteryear and with the regulators running the banks.
 
Value investors and investors screening for “cheap stocks” still need to look elsewhere, unless they know how to model worst case scenarios for about a year or two out from today or if they think they can quantify the regulatory, legal, and operating restriction-adjusted earnings ahead.

JON C. OGG

Jefferies has taken more aggressive steps to thwart the negative news flow than other firms have, but so far it seems that all “facts” are being taken as fiction.  Management has now released detailed data yet again outlining its exposure to weak spots in Europe to try to thwart the efforts of a short selling group.  This starts out “We are writing so that every one of our key constituencies receive the facts and reality directly from us, instead of being misled by half-truths, false rumors and lies being disseminated with malice by a group whose interests are absolutely opposed to yours and ours…”  The firm tries to address every concern out there in that letter.

Jefferies is buying their own paper when and where it can: “As an aside, we note that we repurchased $50 million of our 2012 bonds in the past few weeks and over time, as part of our announced 20 million share-buyback program, about 5 million shares of Jefferies common stock in the open market.”

Regulators make brokers, traders, fiduciaries, and managers record and store instant messages, phone calls, and instant messengers for a reason and that reason is presumably not to just keep these firms buying up more and more data space in storage farms.  If everything that Jefferies is putting out is true, shouldn’t Jefferies be out suing the malicious group(s) AND demanding that regulators conduct an instant crackdown by skimming every instant message, email, and phone call that revolves around every short sale in Jefferies?

Short selling in general is not a bad thing.  Still, it is one aspect of the market that many investors consider a dirty trick or a shell game, but it has many positive effects as far as the overall market is concerned.  The problem is when short sellers attack and then get to become activists against a company.  Disseminate bad information to keep pushing a bet against a company is one thing, but if it is proven to be false and malicious it crosses the line.  At some point, the definition of freedom of speech becomes no different from yelling “Fire!” in a crowded theater.

Jefferies was down 2% and more a while ago and shares are currently down 0.2% at $10.14.  The stock hit a low of $9.60 earlier today and the 52-week trading range is $9.50 to $27.12.

It seems unreasonable that any of the large trading houses would demand that clients who want to hold Jefferies shares make the designation that their shares cannot be borrowed and also demand that the Jefferies shares not be held in “Street Name” as most shares are.  That might act as a buffer to prevent short selling a bit more, and perhaps Jefferies could try to make it more expensive to borrow the stock.  We were told by one trader that the cost is 275 basis points for a borrow, which is no barrier to shorting the stock if someone with deep pockets believes that an implosion or close to it is further heading toward Jefferies.

Jefferies was above $16.00 in August and shares were again under $10.00 earlier today.  We will ask this pointed question, but it is assuming that Jefferies is not selectively eliminating all of the bad things that it is being accused of… If regulators cannot prevent an unwarranted ‘run on the bank’ in the midst of this regulatory climate, what good does it do to just step in with red flags after the fact?

JON C. OGG