The unofficial closing bells put the DJIA down about 6 points to 11,862.68 (-0.05%), the NASDAQ rose more than 14 points (0.56%) to 2,555.33, and the S&P 500 rose 0.3% or more than 3.5 points to 1,219.40.

There were several analyst upgrades and downgrades today, including an “outrageous” prediction from the UK’s Saxo Bank that Apple Inc. (NASDAQ: AAPL) would lose half its value in 2012. Other ratings actions today include Southern Copper Corp. (NYSE: SCCO) restarted as ‘equal weight’ with a $35 target price at Morgan Stanley; Amgen Inc. (NASDAQ: AMGN) raised to ‘neutral’ with a target price of $57 at Goldman Sachs; and Discover Financial Services (NYSE: DFS) raised to ‘buy’ at Stifel Nicolaus. Research in Motion Ltd. (NASDAQ: RIMM) received a number of ratings changes this morning following an uninspired earnings report and delayed release of its new operating system software: shares cut to ‘market perform’ at BMO Capital Markets; maintained as ‘hold’ at Needham; maintained as ‘neutral’ at Credit Suisse; maintained ‘hold’ with lowered price target of $15 at Canaccord Genuity.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: Research in Motion Ltd. is down more than -11.5% at $13.38, after posting a new 52-week low of $13.12; Darden Restaurants Inc. (NYSE: DRI) is down -0.5% at $43.52; Steward Enterprises, Inc. (NASDAQ: STEI) is down more than -1.5% at $5.41; Hovananian Enterprises Inc. (NYSE: HOV) is down more than -4% at $1.29; and Quiksilver Inc. (NYSE: ZQK) is up more than 11% at $3.42.

Other standouts from today include the following stocks:

ISTA Pharmaceuticals Inc. (NASDAQ: ISTA) is up nearly 71% at $6.65. The eye-care drug company is the target of a hostile takeover bid from Valeant Pharmaceuticals International Inc. (NYSE: VRX) at a 68% premium to last night’s closing share price, or $6.50/share. More coverage here.

RSC Holdings Inc. (NYSE: RRR) is up more than 57% at $17.88, a new 52-week high. The construction and industrial equipment rental company is being acquired by competitor United Rentals Inc. (NYSE: URI) for $18/share, or about $1.9 billion in cash and stock.

Morton’s Restaurant Group Inc. (NYSE: MRT) is up nearly 33% at $$6.85. The steakhouse chain has agreed to an all-cash acquisition by privately held Landry’s Inc. at $6.90/share, for a total price of about $116.6 million.

Inhibitex Inc. (NASDAQ: INHX) is down more than -20.5% at $10.32. The biopharmaceutical firm is being hit with concerns over a new hepatitis C drug following the withdrawal of a rival drug discovered to impair liver function.

CryptoLogic Ltd. (NASDAQ: CRYP) is up more than 42% at $2.25, after posting a new 52-week high of $2.30 earlier today. The online gambling software maker is expected to get a takeover offer from Amaya Gaming Group (OTC: AMYGF) worth about $34.5 million.

Cobalt International Energy Inc. (NYSE: CIE) is up more than 21% at $10.90. The oil & gas E&P company was able to extend its lease on a deepwater rig from Transocean Ltd. (NYSE: RIG) that enables the company to continue exploring for two prospects offshore of Angola that the company believes may hold up to 2 billion barrels of crude.

Stay tuned for Monday. Richmond Federal Reserve Bank President Jeffrey Lacker is speaking in Charlotte, NC. Here are other noteworthy events on the schedule (all times Eastern):

• 10:00 a.m. – National Association of Builders housing market index
• 11:30 a.m. – 3- and 6- month Treasury bill auction
• 1:00 p.m. – Two-year Treasury note auction

Have a great weekend.

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Paul Ausick

McCormick & Schmick’s Seafood Restaurants, Inc. (NASDAQ: MSSR) is currently the most recent of the upscale dining chains that has an offer to go private.  The offer comes from Landry’s via Fertitta for $9.25 per share and the stock is trading higher than the proposed offer.  The 52-week trading range is $6.14 to $11.98, so the thought is that shareholders will demand a higher price.  At $9.45, this company’s market cap is only $140 million against 2010 sales of $351 million.  As a reminder, this was a $20.00 to $25.00 stock back in 2006 to 2007.

It was less than a month ago that Morton’s Restaurant Group, Inc. (NYSE: MRT) announced a strategic alternatives exploration which could involve a sale.  By the way, ‘strategic alternatives’ almost always translates to “looking for a buyer.”  This stock is at $7.50 today and it traded from $6.44 up to $7.20 when it made this announcement.  The upscale steakhouse has a current value of $120 million against $296 million in 2010 sales.

But what about other chain restaurants?  Our view is that any of these chains could be ‘go-private’ candidates at any point.  Many management teams have grown very tired of living by a monthly or quarterly benchmark of same-store sales growth.  We have identified several others we think can easily be taken private in the months or years ahead.  The only caveat is a simple one: these management teams and corporate insiders will have to want to go private.  Here are a few other dining chains to possibly consider.

Ruth’s Hospitality Group Inc. (NASDAQ: RUTH)… Great steaks, hot steak ovens, upscale, and worth one-quarter of its 2005 to 2006 post-IPO peak.  It has a loyal customer base (even if the Houston Ruth’s needs a major face lift) because of great steaks and its $170 million valuation offers much room for a buyer to milk more money out of the model whether a buyer would want to grow the chain count or not.  Sales in 2010 were $357.6 million.  At $5.20, its 52-week range is $3.15 to $6.60.

The Cheesecake Factory Incorporated (NASDAQ: CAKE)… Great continental food under flagship brand and under Grand Lux.  Valuation is always a concern here at $1.75 billion in market cap against $1.66 billion in 2010 sales.  The price tag may drive away buyers, but the way to milk more money out of this one boils down to a buyer simply cutting the portion sizes by a fraction.  At a share price of $29.69, its 52-week range is $21.56 to $34.00.

P.F. Chang’s China Bistro. Inc. (NASDAQ: PFCB)… Great upscale Chinese or Asian-fusion at flagship brand and more casual and takeout venue of Pei Wei, with the latter having more growth opportunities.  The market cap is $1.08 billion and 2010 sales were $1.24 billion.  With shares at $46.20, its 52-week range is $37.36 to $53.39.  This one now targets roughly 40% of its income to be paid out in dividends.

California Pizza Kitchen Inc. (NASDAQ: CPKI)… Upscale pizza?  This one was supposedly going private before, yet here is still public.  It has a market value of about $400 million and 2010 sales were $642 million.  At $16.35, its 52-week trading range is $12.95 to $22.92.

You have noticed that no buyout targets have been offered up.  For any of these to be taken private it will require that management wants to go private.  Having a cheap stock might not matter in the slightest.  All of these offer at least some of what private equity seeks… Premium products in premium locations, creating at least a partial barrier to entry, with cash flows.  All of these models can be leveraged some and can probably be milked for more cash flow if they were private. A private equity buyer often may treat any restaurant chain more like a cash flow monster than it does a giant growth engine.  After all, there are only so many locations that a single concept can support.

High-end pizza, high-end Chinese, high-end continental, high-end anything… even relatively upscale can work.  If these kick off major cash flows for a private equity investor, all that matters is that they kick off enough consistent cash flow that they can be leveraged up and/or sold off at a higher price to a different buyer down the road while they are busy kicking off cash today.

Just because we believe these can be targets down the road does not mean they will all become targets.  At the end of the day, value is in the eye of the beholder.

JON C. OGG

• American Capital (ACAS) Cut To Underweight from Neutral By JP Morgan.
• Boston Scientific (BSX) Cut to Underperform at Merrill Lynch.
• Comverse Tech (CMVT) Cut to Sell at Canaccord.
• Federal Signal Corp. (FSS) Cut to Sell at Goldman Sachs.
• Heartland Payment Systems (HPY) Cut to Underweight at JPMorgan.
• Morton’s Restaurant (MRT) Cut to Market Perform at Wachovia.
• Network Engines (NENG) Cut Hold at Cantor Fitzgerald.
• Open Text (OTEX) Cut to Hold at Canaccord.
• Reliant Energy (RRI) Cut to Neutral at Credit Suisse.
• Ruth’s Hospitality (RUTH) Cut to Market Perform at Wachovia.

Jon C. Ogg
October 1, 2008