AeroVironment, Inc. (NASDAQ: AVAV) Raised to Buy at Goldman Sachs.
Aetna, Inc. (NYSE: AET) named Bull of the Day at Zacks.
Alcatel-Lucent S.A. (NYSE: ALU) Cut to Sell at S&P Equity Research.
Ann Inc. (NYSE: ANN) Cut to Underperform at Barclays.
Cardinal Health Inc. (NYSE: CAH) Reiterated Buy with $52 price target at Argus.
Comerica Inc. (NYSE: CMA) Raised to Outperform at RBC.
Corning Inc. (NYSE: GLW) Raised to Overweight at Piper Jaffray.
FedEx Corporation (NYSE: FDX) Raised to Buy at BofA/ML.
JAKKS Pacific, Inc. (NASDAQ: JAKK) named Bear of the Day at Zacks.
Macy’s Inc. (NYSE: M) named as value stock of the day at Zacks.
PNC Financial Services Group, Inc. (NYSE: PNC) Cut to Market Perform at BMO.
Polypore International Inc. (NYSE: PPO) Raised to Outperform at Baird.
Royal Dutch Shell (NYSE: RDS-A) Cut to Neutral at Credit Suisse.
Skechers U.S.A., Inc. (NYSE: SKX) Raised to Neutral at Stern Agee.
Teva Pharmaceutical Industries (NASDAQ: TEVA) Cut to Equal-weight at Morgan Stanley.
Under Armour Inc. (NYSE: UA) Reiterated Buy with $90 target at Argus.
Weyerhaeuser Company (NYSE: WY) Cut to Sell at UBS.

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

JON C. OGG

Fed president Richard Fisher says there is no need for QE3. (Reuters)

Panasonic posts a quarterly loss of $2.6 billion. (Reuters)

Martha Stewart Omnimedia (NYSE: MSO) says a provision in its deal with Macy’s (NYSE: M) would let it move ahead with its new JCPenney (NYSE: JCP) deal. (Reuters)

The U.S. plans to spend $2.8 billion to upgrade the F-16. (Reuters)

The Senate will pass a bill that makes it illegal for members of Congress to engage in insider trading. (WSJ)

Glencore and Xstrata may merge because of the rise in value of natural resources. (WSJ)

Bank “rainy day” funds may be run down by a need to boost earnings. (WSJ)

PetroChina (NYSE: PTR) will buy into Canadian shale assets to ensure future supply. (WSJ)

Corporate profits have risen but the portion paid out in taxes has fallen. (WSJ)

The Government Accountability Office says many hospitals overpay for devices. (WSJ)

The Obama Administration will accelerate the approval of wind farms off the East Coast. (WSJ)

Facebook will push advertisers to use its Sponsored Stories to increase its revenue. (WSJ)

Google (NASDAQ: GOOG) will try to add to the security of its Android mobile-device software to combat hackers. (WSJ)

The head of Dow Chemical (NYSE: DOW) says Europe is in a recession. (WSJ)

New York Times (NYSE: NYT) profits fall as digital revenue fails to grow enough to offset print. (WSJ)

CME Group (NASDAQ: CME) will set an insurance program to help farmers after the collapse of MF Global. (WSJ)

A St. Louis Federal Reserve report shows that startup growth has slowed. (WSJ)

Excess natural gas supplies could cause a price crash in the spring. (WSJ)

The Securities and Exchange Commission allows big banks to avoid some sanctions. (NYT)

The National Institute of Economic and Social Research says the UK will be in recession this year. (NYT)

Greek tax reform has not overcome the nation’s inability to collect taxes. (NYT)

China may put money into the European Stability Mechanism/European Financial Stability Facility to help the region. (FT)

In testimony before Congress, Bernanke expresses concern about the growth of the economy. (FT)

Greece faces more trouble in its effort to remain in the eurozone as its rescue falters. (Bloomberg)

Deutsche Bank will not take European Central Bank loans in a move to protect its reputation. (Bloomberg)

Douglas A. McIntyre

Several media reports say that Johnson will lay off several thousand workers. The cuts make sense from a financial standpoint, but their announcement should have been handled better. Press leaks made it appear that JCPenney is desperate to cut costs, which is probably true. There is no need to telegraph the retailer’s problems, though. It could have shown the need to carefully cut costs as part of a broader strategy.

JCPenney set a deal to distribute Martha Stewart Omnimedia (NYSE: MSO) products in its stores. It took a 16.6% equity position in the media company for which it paid $38.5 million. Rival Macy’s (NYSE: M) says it has an exclusive arrangement for Stewart products that dates from 2007. JCPenney management, which includes Johnson, must have known of the risk of a Macy’s action. And Martha Stewart’s brand is aged. Her company is in trouble, which probably would have accelerated without the JCPenney infusion. Now, JCPenney has the distraction of a legal battle that involves its larger and more successful rival.

In addition to these tactical problems, JCPenney’s fortunes continue to erode. Same-store sales are expected to show erosion for the past quarter. Revenue dropped 2.3% in the five weeks that ended December 31, compared to the same period last year.

JCPenney will host a two-day discussion about its prospects on January 25 and January 26. It has been described by the company as an event at which senior management “will outline the Company’s plan to transform JCPenney into America’s favorite store.” The characterization of the event is grandiose. It implies that new management already has most, if not all, of the answers for stemming a long-term decline. The change actually will have to be very gradual. JCPenney’s sales and brand are too badly damaged. Recent events show that the task of fixing the company becomes more difficult with each passing week.

Douglas A. McIntyre

Macy’s (NYSE: M) sues Martha Stewart Omnimedia (NYSE: MSO) over a deal the media company did with JCPenney (NYSE: JCP) that may have broken an exclusivity agreement. (Reuters)

India’s central bank shifts it emphasis from inflation to growth. (Reuters)

Texas Instruments (NYSE: TXN) reports its chip demand has risen, but it will shutter two factories. (Reuters)

International Monetary Fund leader Largarde warns that the eurozone must promote growth in addition to austerity. (WSJ)

The European Union agrees to begin to embargo Iran oil. (WSJ)

The Organisation for Economic Co-operation and Development says in its “Going for Growth” report that nations should cut tax benefits for mortgages. (WSJ)

Dice Holdings (NYSE: DHX) reports that Silicon Valley engineer pay moved beyond an average of $100,000. (WSJ)

AT&T (NYSE: T) sets plans to give T-Mobile $1 billion in spectrum as part of a deal breakup pact. (WSJ)

A second bailout of Portugal is likely. (WSJ)

AMR, parent of American Airlines, tells employees that vested benefits will not be undermined if pension programs are ended. (WSJ)

Falling demand for coal will undermine industry profits. (WSJ)

Lee Enterprises will leave Chapter 11 with much of its long-term debt deferred. (WSJ)

Federal and state authorities are close to a deal with banks over mortgage violations that could total $25 billion. (WSJ)

The Energy Information Administration expects oil prices to reach an average of $146 by 2035. (WSJ)

A mortgage deal between banks and the government could cut one million mortgages by about $20,000 each. (NYT)

Eurozone finance ministers are closer to an arrangement to create a permanent bailout fund. (NYT)

Germany may back a permanent bailout fund for the eurozone in exchange from more stringent budget rules. (FT)

NYSE Euronext (NYSE: NYX) and Deutsche Boerse may be unable to block an European Commission veto of their merger. (Bloomberg)

S&P cuts Societe Generale’s ratings. (Bloomberg)

Douglas A. McIntyre

While we have some valuation concerns on SIRIUS and while we have some concerns about the future of some of the satellite radio’s top media figures posing a talent departure risk, the news this week that the entire United States car fleet is at a record age is helping to drive Sirius XM bulls.

The same argument can be made for Pandora Media, Inc. (NYSE: P), and that can also be a threat to Sirius XM, but so far this remains a wild card.  Pandora’s stock is still at only about half of its post-IPO peak in 2011 even though it has managed to score several key auto-maker option pacts ahead of the Consumer Electronics Show.

Ford Motor Co. (NYSE: F) and General Motors Company (NYSE: GM) also have a huge opportunity ahead.  Ford has even reinstated its dividend sooner than expected.  Car buyers are not ramping up hybrid buying due to cost, but many of the new cars sold will in fact be Sirius XM subscribers.  Some may even be Pandora subscribers.

Last night Jim Cramer even talked up the auto parts sector on CNBC’s MAD MONEY because of the coming car sales boom.  It turns out that even the most frugal of the frugal can only drive an old car for so long.  Eventually, the cost of maintenance and repairs exceeds the cost of a new car even if the car is not quite what a buyer would prefer to drive.  After all, what good is it to have a car with a $30,000 new sticker price  that is 80% or 90% devalued for trade-in if you have to keep putting in $200 to $500 every three months in repairs and band-aid work?

SIRIUS shares closed out 2011 at $1.82, and now shares are up 18% even though today’s $2.15 price is a tiny loss.  Here are some year-to-date comparisons for 2012 so far: Pandora is up 29.5% YTD,  Ford is up almost 17% YTD, and GM is up 21% YTD in 2012.

JON C. OGG

The unofficial closing bells put the DJIA up nearly 70 points to 12,462.47 (0.56%), the NASDAQ rose nearly 26 points (0.97%) to 2,702.50, and the S&P 500 rose 0.89% or more than 11 points to 1,292.08.

There were several analyst upgrades and downgrades today, including Intel Corp. (NASDAQ: INTC) maintained as ‘top tech/semiconductor’ pick at Credit Suisse; Netflix Inc. (NASDAQ: NFLX) cut from ‘neutral’ to ‘underperform’ at BofA/ML; Starbucks Corp. (NASDAQ: SBUX) reiterated as ‘buy’ and estimates raised at Argus; The Walt Disney Co. (NYSE: DIS) cut to ‘equal-weight’ at Barclays; and Macy’s Inc. (NYSE: M) reiterated as ‘outperform’ and price target raised from $32 to $36 at Credit Suisse.

Earnings reports of note since markets closed yesterday include: Alcoa is up 0.27% at $9.45; Emulex Corp. (NYSE: ELX) is up more than 13% at $8.38; and BSD Medical Corp. (NASDAQ: BSDM) is down more than -7% at $2.09. After markets close today Synnex Corp. (NYSE: SNX) reports earnings and tomorrow’s earnings schedule includes Lennar Corp. (NYSE: LEN) and Supervalu Inc. (NYSE: SVU).

Other standouts from today include the following stocks:

WebMD Health Corp. (NASDAQ: WBMD) is down more than -28% at $26.41, after posting a new 52-week low of $25.01 earlier today. The web-based healthcare company’s CEO resigned, the search for an acquirer was terminated, and the revenue outlook for 2012 was lowered.

Complete Genomics Inc. (NASDAQ: GNOM) is down nearly -26% at $2.88. The biotechnology company shipped fewer genomes than expected in the fourth quarter.

Idenix Pharmaceuticals Inc. (NASDAQ: IDIX) is up more than 25% at $12.10, a new 52-week high. The drug maker continues to bask in the reflected glow of yesterday’s takeover of Inhibitex Inc. (NASDAQ: INHX) by Bristol Myers Squibb (NYSE: BMY).

Tiffany & Co. (NYSE: TIF) is down more than -10% at $59.97. The company reported weak earnings and a lower forecast this morning.

Liz Claiborne Inc. (NYSE: LIZ) is down more than -13% at $8.63. The clothing company’s CFO resigned and the company lowered 2012 revenue estimates.

Stay tuned for Wednesday. Chicago Fed President Charles Evans, Atlanta Fed President Dennis Lockhart, and Philadelphia Fed President Charles Plosser are giving speeches. Here are the 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. – 10-year Treasury note auction
• 2:00 p.m. – Federal Reserve Beige Book released

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Paul Ausick

Apollo Group Inc. (NASDAQ: APOL) Reiterated Buy and raised price target to $63 from $55 at Argus.
ASML Holding N.V. (NASDAQ: ASML) Raised target at Credit Suisse.
AutoNation Inc. (NYSE: AN) Started as Neutral at Stern Agee.
Bank of America Corporation (NYSE: BAC) Cut to Underperform from Neutral at Zacks (late Monday call).
Choice Hotels (NYSE: CHH) Cut to Underperform from Neutral at Credit Suisse.
Gulfmark Offshore, Inc. (NYSE: GLF) Started as Outperform at Credit Suisse.
HSN, Inc. (NASDAQ: HSNI) Started as Buy at Stifel Nicolaus.
ICICI Bank Ltd. (NYSE: IBN) Cut to Underperform as Bear of the Day at Zacks.
Intel Corporation (NASDAQ: INTC) maintained as the top tech/semi pick for 2012 from Credit Suisse.
Macy’s Inc. (NYSE: M) Reiterated Outperform and raised target to $36 from $32 at Credit Suisse.
Motorola Mobility Holdings Inc. (NYSE: MMI) Maintained Sell at Argus.
Netflix, Inc. (NASDAQ: NFLX) Cut to Underperform from Neutral at BofA/ML.
Overseas Shipholding Group Inc. (NYSE: OSG) Cut to Market Perform at Wells Fargo.
Republic Services, Inc. (NYSE: RSG) Cut to Neutral at JPMorgan.
Ryder System, Inc. (NYSE: R) named as value stock of the day at Zacks.
SM Energy Co. (NYSE: SM) Maintained Outperform as Bull of the Day at Zacks.
Starbucks Corporation (NASDAQ: SBUX) Reiterated Buy and raised estimates at Argus.
Tidewater Inc. (NYSE: TDW) Started as Neutral at Credit Suisse.
The Walt Disney Co. (NYSE: DIS) Cut to Equal-weight at Barclays.
Xerox Corporation (NYSE: XRX) Cut to Equal-weight at Barclays.

If you enjoyed the Top Analyst Upgrades & 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 major IPO’s and M&A, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

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JON C. OGG

Teen stores Buckle and Zumiez battered expectations, while Gap and Wet Seal both missed expectations badly.

Data from CNBC.

Shares had risen from under $26 to over $35 based upon Ron Johnson’s taking the helm.  Prior to that, J.C. Penney had been somewhat on life support compared to Macy’s Inc. (NYSE: M) and Saks Inc. (NYSE: SKS).  It did manage to do better than Kohl’s Corporation (NYSE: KSS).

The retail chain posted December same-store sales of 0.3% versus an expected drop of -0.1%.  Last year the company posted a same-store sales increase of 3.7%.  The outlook is as follows: “Due to the softer sales performance during the first two months of the quarter, the Company now anticipates that comparable store sales for the fourth quarter will be down slightly to last year. Earnings before one-time items identified below, are now expected to be in the range of $0.65 to $0.70 per share on a non-GAAP basis, reflecting lower sales and higher markdown activity than anticipated throughout the quarter.”  The consensus estimate had been $1.08 EPS.

Investors who missed getting in on this one may look at the news with a smile because it at least allows them a closer chance of getting in on a transformation in the making. Ron Johnson, the brains behind the retail effort of the hugely successful stores of Apple Inc. (NASDAQ: AAPL), has taken over as CEO.  For new investors, this is not a fourth quarter story.  This is not a story of guidance for the current quarter, and it may not even be a story of strong results in 2012. 

Ron Johnson is set to transform the look and feel of this company entirely.  The company has already signed a deal with Martha Stewart Living Omnimedia Inc. (NYSE: MSO) for branded merchandise for years ahead.  Johnson is going to unveil his new store design later this month (January 25) and here is a photo of the invite that was sent to me last night:

Penney’s shares are down about 6.2% at $32.75 and the 52-week range is $23.44 to $41.00.  This drop still only gets the stock back down to the prior consensus price target of $32.31 from Thomson Reuters.  Unfortunately, this turnaround story is not cheap against other retailers on a forward earnings valuation.  That happens to be the case in many turnarounds as investors sometimes pay a premium to get in line.

New investors and those on the sidelines may hope that the stock gets back into the high $20′s.  That may happen and it may not.  When you consider that Ron Johnson is likely going to revamp the company from the ground up and give a major facelift to bring the Apple-cool through the doors and when you consider that Apple’s playbook has been to “underpromise and over-deliver,” this drop may be a blessing for new and interested investors.

The good news is that the stock also offers stock options so investors van hedge their turnaround bets rather easily.  Options expire on January 20, 2012, but the February options make it easy to invest with providing downside protection of about only 5% risk in the next six weeks.  For a turnaround story under a great new retail leader, that might be a gift.

The other side of the coin is simple, even if hard to consider: What if Ron Johnson flops?  It is easy to argue that clothing, accessories and household products have no catalyst like Apple did a decade ago.

Stay tuned.

JON C. OGG

Read the ten best online stores this holiday
Read the ten worst online stores this holiday 

To put those customer service rankings in context, we looked at how the parent companies that own the websites have performed recently.  We found that a strong customer service rating often coincides with a company that has widely regarded brands.

It begs the question: Does Apple (NASDAQ: AAPL) have such a high customer service ranking because so many consumers love the Apple brands? Or, is Apple’s customer service for online shoppers really superior to that of other e-commerce businesses? Apple is tied for second place in the index. Amazon.com is in first place. It also has a sterling reputation with consumers, as do some of its major products like the Kindle.

At the bottom of the ForeSee index are Gap (NYSE: GPS), Sony (NYSE: SNE) and Overstock (NASDAQ: OSTK). Gap recently said it would close 21% of its U.S. flagship stores. Sony has had trouble gaining sales for its PCs, games, smartphone and TV products. Overstock, an also-ran online department store, was founded in the days of the dial-up internet. It is hard to see how any of these could be at the top of the list. Or, perhaps if they were at the top of the list, they would not be in such deep trouble now.

ForeSee’s E-retail Satisfaction Index included the top 40 retailers by sales. The company surveyed 8,500 customers between Thanksgiving and Christmas. Despite its shortcomings, 24/7 Wall St. used the data from ForeSee as a foundation, because it is a reasonable measurement of the experience that consumers have with specific e-commerce sites, whether those sites are part of highly successful companies or ones on the verge of failure.

There is also some evidence that a few troubled retailers have actually performed well online. Whether that success is enough to save the companies themselves is impossible to tell. One such example is Avon (NYSE: AVP), with online service that is tied for second among all e-commerce sites in the ForeSee index. But Avon recently posted a disastrous quarter, and its CEO of 12 years was dismissed. Similarly, JCPenney’s (NYSE: JCP) online operations’ customer satisfaction is equal to Apple’s, which is also tied for second place in the ForeSee rankings. However, JCPenney has lost sales to big-box retailers such as Walmart (NYSE: WMT) for years. It is worth noting that JCPenney just hired the head of retail stores at Apple to turn the bricks-and-mortar retailer around. Apple is one of the few companies that was successful online long before it began to build physical stores.

These are the the companies with the best and worst online customer satisfaction. To draw our conclusions about why they are on the list and what the relationship is between the companies and their e-commerce operations, we examined three factors: the ForeSee satisfaction data, the annual sales of each of the companies, and the amount of traffic each site had in November — the most recent month measured by audience research firm Compete.com. Foresee describes its rating as “Average customer satisfaction with the top 40 U.S. e-retail websites increased by one point this year to tie 2009’s all time high score of 79 on the study’s 100-point scale. Satisfaction scores for individual e retailers span a 16-point  range, from a high of 88 (Amazon) to a low of 72 (Overstock).”