Cliff’s Natural Resources Inc. (NYSE: CLF) raised to Outperform from Market Perform at FBR Capital Markets.

Dollar General Corp. (NYSE: DG) was raised to Buy from Neutral at Bank of America/Merrill Lynch.

Hanesbrands Inc. (NYSE: HBI) was initiated with an Outperform rating at Wells Fargo.

Humana Inc. (NYSE: HUM) was raised to Overweight at J.P. Morgan.

Intel Corp. (NASDAQ: INTC) was raised to Outperform from Sector Perform at RBC Capital Markets.

Knot Offshore Partners L.P. (NYSE: KNOP) saw its quiet period end. This was initiated as Buy at Bank of America/Merrill Lynch, started as Overweight at Barclays and started as Outperform at Raymond James.

Privatebancorp Inc. (NASDAQ: PVTB) was named Bull of the Day at Zacks Investment Research.

Thoratec Corp. (NASDAQ: THOR) was raised to Neutral from Underperform at Credit Suisse.

UnitedHealth Group Inc. (NYSE: UNH) was raised to Overweight at J.P. Morgan.

YRC Worldwide Inc. (NASDAQ: YRCW) was raised to Hold from Underweight at BB&T Capital.

Read also: Oppenheimer’s Top Institutional List of Stocks to Buy and Deutsche Bank’s Top Quantitative Small Cap Stocks

We also have the top analyst downgrades and cautious calls for this Monday.

ARM Holdings PLC (NASDAQ: ARMH) started as Neutral at Credit Suisse.

Corporate Office Properties Trust (NYSE: OFC) raised to Neutral at BofA/ML.

Dollar Tree Inc. (NASDAQ: DLTR) raised to Outperform at Wells Fargo.

Dominion Resources Inc. (NYSE: D) raised to Outperform with $59 target at Credit Suisse.

FedEx Corp. (NYSE: FDX) reiterated Buy and raised target to $108 at BofA/ML.

Healthcare Realty Trust Inc. (NYSE: HR) cut to Sector Perform at RBC.

Home Depot Inc. (NYSE: HD) cut to Perform at Oppenheimer.

IMAX Corp. (NYSE: IMAX) started as Outperform with $28 target at Credit Suisse.

Johnson Controls Inc. (NYSE: JCI) cut to Neutral at BofA/ML.

M&T Bank Corp. (NYSE: MTB) raised to Outperform with $109 target at Credit Suisse.

Owens Corning (NYSE: OC) cut to Neutral at JPMorgan.

Qualcomm Inc. (NASDAQ: QCOM) raised to Outperform at BNP Paribas.

SAP A.G. (NYSE: SAP) cut to Equal Weight at Barclays.

Shutterfly Inc. (NASDAQ: SFLY) raised to Buy at Cantor Fitzgerald.

SkyWest Inc. (NASDAQ: SKYW) cut to Underperform at BofA/ML.

TECO Energy Inc. (NYSE: TE) cut to Underperform as Bear of the Day at Zacks.

Thoratec Corp. (NASDAQ: THOR) raised to Outperform as Bull of the Day at Zacks.

Tyco International Ltd. (NYSE: TYC) cut to Neutral at Credit Suisse.

Viacom Inc. (NASDAQ: VIA) cut to Underperform at Bernstein.

Zynga Inc. (NASDAQ: ZNGA) cut to Neutral at Piper Jaffray.

Bank of America Merrill Lynch has made several ratings changes on the U.S. banking sector. Fifth Third Bancorp (NASDAQ: FITB) was cut to Neutral from Buy on Tuesday. This morning we see that Bank of America says ahead of earnings season that it is time to increase weightings in money center banks. The bank reinstated coverage as follows: Citigroup Inc. (NYSE: C) with a Buy rating and $45 price objective and J.P. Morgan Chase & Co. (NYSE: JPM) as Buy with a $48 price objective. U.S. Bancorp (NYSE: USB) was downgraded to Neutral in the call. Yesterday Bank of America outlined the case for the great rotation into stocks and out of bonds in 2013.

JON C. OGG

Thoratec issued a statement commenting about the recall on a recent voluntary medical device correction notification related to the bend relief component for the sealed outflow graft of the HeartMate II® Left Ventricular Assist System.  Here is what matters today: “The company initiated the voluntary Notification to clinicians on February 23, 2012.”

The company noted, “Following the company’s voluntary Notification to clinicians on February 23, 2012, the FDA posted information regarding the action on its website during the week of March 19th.  Today, this same information appeared in the news section of the FDA website.  However, today’s posting was only a reference to the previous communication, and there was no new information provided.“

Thoratec has also contacted all hospitals where the HeartMate II sealed outflow grafts had been distributed.  It noted, “The company’s voluntary Notification was intended to provide information to clinicians, including a clarification of the instructions for use, and did not involve the return of any product.  Subsequently, the company received acknowledgment forms from surgeons at all such U.S. hospitals, verifying that clinicians have reviewed the Notification and understand the information provided.”

This was a situation where the news seemed more like re-news.  It has happened before and it will happen again in the future.  After having been down as much as 10% earlier, Thoratec shares are down just under 4.5% at $32.81.  It is probably safe to assume that analysts who rate Thoratec as “Buy” and “Outperform” will be defending this one Thursday morning.

JON C. OGG

Back on March 19 the FDA recall site noted, “The reported incidence of the defect, disconnected outflow graft bend relief, is 0.91% (29/3,200). Of these 29 incidents, 24 were observed in x-ray images or during surgical procedures, and were thus unlikely to be related to patient symptoms. However, in at least one reported case, it is noted that the disconnected bend relief may have contributed to the need for reoperation. The bend relief is designed to prevent kinking of the outflow conduit that connects the HeartMate II pump to the ascending aorta.”

The FDA also noted in mid-March that the disconnection of the bend relief from the outflow graft might cause one or more of the following symptoms:

• low pump flow, hemolysis,
• fluctuations in pump flow,
• speed and/or power,
• or worsening symptoms of heart failure.

The rates of incident were very low, but some fatalities at the time were reported.  Unfortunately, recalling heart devices is no easy measure and the product was said to have been sent to 226 hospitals throughout the United States, Europe, Canada and other countries.

Thoratech shares had been down as much as 10% but the stock is now down “only” 5.6% at $32.42 on about six-times normal trading volume.

Dear Patient, We need to borrow you to get at your heart again….

JON C. OGG

Akamai Technologies, Inc. (NASDAQ: AKAM) Cut to Sell from Neutral at Citigroup.
AGL Resources Inc. (NYSE: GAS) Started as Underperform and named as Bear of the Day at Zacks.
Apple Inc. (NASDAQ: AAPL) Reiterated Buy with $460.00 price target objective by Argus; maintained Conviction Buy List and target raised to $550 from $520 at Goldman Sachs.
ARM Holdings PLC (NASDAQ: ARMH) Started as Underperform at Bernstein.
Barnes Group Inc. (NYSE: B) named as value stock of the day at Zacks.
Costco Wholesale Corporation (NASDAQ: COST) Cut to Underperform at Bernstein.
Exxon Mobil Corporation (NYSE: XOM) Reiterated Buy at Goldman Sachs.
First Industrial Realty Trust (NYSE: FR) Cut to Neutral at Credit Suisse.
Hilltop Holdings, Inc. (NYSE: HTH) Raised to Outperform as Bull of the Day at Zacks.
Integra LifeSciences Holdings Corp. (NASDAQ: IART) Cut to Hold at Argus.
International Game Technology (NYSE: IGT) Removed from US Focus List at Credit Suisse.
Merck & Co. Inc. (NYSE: MRK) Downgraded to Hold at Jefferies.
Pandora Media Inc. (NYSE: P) Started as Buy at Needham.
Penn National Gaming Inc. (NASDAQ: PENN) Added to the US Focus List at Credit Suisse.
PVH Corporation (NYSE: PVH) Started as Buy at Stern Agee.
The Royal Bank of Scotland Group plc (NYSE: RBS) Raised to Neutral at JPMorgan.
Southern Copper Corporation (NYSE: SCCO) Cut to Hold at Deutsche Bank.
Thoratec Corporation (NASDAQ: THOR) Cut to Market Perform at Wells Fargo.

If you enjoyed the top analyst upgrades and 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 additional research notes, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Annaly Capital Management, Inc. (NYSE: NLY) Started as Market Perform at Wells Fargo.
BHP Billiton Limited (NYSE: BHP) Reiterated Strong Buy as Value at Zacks.
Brightpoint Inc. (NASDAQ: CELL) Raised to Outperform as Bull of the Day at Zacks.
France Telecom (NYSE: FTE) Raised to Neutral at UBS.
Fusion-io Inc. (NYSE: FIO) Started as Neutral at Goldman Sachs; Started as Equal-Weight at Morgan Stanley; Started as Neutral at JPMorgan; Started as Outperform at Credit Suisse.
Invesco Mortgage Capital Inc. (NYSE: IVR) Started as Outperform at Wells Fargo.
Medtronic, Inc. (NYSE: MDT) Cut to Underperform as Bear of the Day at Zacks.
ONEOK Inc. (NYSE: OKE) Cut to Neutral at BofA/ML.
The Talbots Inc. (NYSE: TLB) Raised to Neutral at Janney Capital.
Thoratec Corporation (NASDAQ: THOR) Started as Outperform with $43 target at Credit Suisse.
VCA Antech Inc. (NASDAQ: WOOF) Raised to Buy at BofA/ML.
WebMD Health Corp. (NASDAQ: WBMD) Cut to Neutral at Citigroup; maintained Buy but cut target to $44 at Canaccord Genuity.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Alcatel-Lucent (NYSE: ALU) Reiterated Hold at Argus.
Analog Devices Inc. (NYSE: ADI) Raised to Overweight at JPMorgan.
Barnes & Noble, Inc. (NYSE: BKS) Raised to Neutral at Goldman Sachs.
Dollar Tree, Inc. (NASDAQ: DLTR)  Raised to Overweight at Barclays.
Edison International (NYSE: EIX) Raised to Hold at Citigroup.
Estee Lauder Companies (NYSE: EL) Raised to Outperform as the Bull of the Day at Zacks.
Family Dollar Stores Inc. (NYSE: FDO) Cut to Equal-weight at Barclays.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) Raised to Buy at KeyBanc.
Intel Corporation (NASDAQ: INTC) Cut to Hold at S&P Equity Research (late-Monday call).
Linear Technology Corp. (NASDAQ: LLTC) Cut to Neutral at JPMorgan.
Netflix, Inc. (NASDAQ: NFLX) Cut To Equal-weight at Morgan Stanley.
Salesforce.com (NYSE: CRM) Raised to Buy at Jefferies.
Thoratec Corporation (NASDAQ: THOR) Cut to Underperform as Bear of the Day at Zacks.
United States Steel Corporation (NYSE: X) Raised to Buy at Goldman Sachs.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

A 33% run-up in Bankrate (RATE),  for more details.

Thoratec (THOR) up 12%, details.

Powerwave (PWAV) drops 45%, details.

Gramercy Park (GKK) up 55%, details.

Douglas A. McIntyre

Thoratec issued a worldwide medical device correction of all serialnumbers of the HeartMate II Left Ventricular Assist Systems havingCatalogue No. 1355 or 102139.  These have been distributed since thebeginning of clinical studies in November 2003.

The company said that over time, wear and fatigue of the percutaneouslead connecting the HeartMate II LVAS blood pump with the SystemController may result in damage that could interrupt pump function,require re-operation to replace the pump and potentially result inserious injury or death.

It also said that the estimated probability of the need for pumpreplacement due to percutaneous lead damage is 1.3% at 12 months, 6.5%at 24 months and 11.4% at 36 months.

There is just one small problem with recalls and product defects inmedical device companies.  Patients generally have to undergo a newsurgical procedure to have the recalled item removed and have to havenew devices inserted.  This is almost always done at the same time, butit isn’t quite the same as taking your car in because the windshieldwipers have a 15% failure rate.

The other issue about medical device recalls is that they can destroythe image medical device company which issued a recall.  Lastly, it canturn doctors away to competing products or encourage them to stop useof the recalled product even if the replacement is fine.  Few doctorslike to admit it, but they also have to respond and react to publicopinion or negative press.

Thoratec shares are down 14% at $21.53, and the 52-week trading rangeis $12.92 to $29.72.  The company is very lucky that this reactionisn’t worse.

Jon C. Ogg
October 27, 2008