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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While we are expecting a dividend hike again, it seems unlikely that the boost will end up being a large dividend boost.  Pfizer’s current $0.80 per year annualized payout compares to earnings estimates of $2.28 EPS for 2011 and $2.31 EPS for 2012.  In short, Pfizer is not quite paying out 40% of its normalized income.

Drug rival Merck & Co. Inc. (NYSE: MRK) recently announced its first dividend hike in years.  It was actually the first hike since the Vioxx scandal.  That should only keep pressure on Pfizer to go ahead and raise its dividend.

There is a history of its dividend hike coming this time of year, but the payout hike won’t be realized as cash in the bank for investors for another 60 days or so.  The dividend being raised was last announced on December 13, 2010 and previously on December 14 of 2009.

Pfizer noted last year that the move to $0.20 from $0.18 per quarter was roughly an 11% hike.  Pfizer also has a game of catch-up to play as its dividend used to be much higher at $0.32 per quarter before the recession caused many companies to lower their very high yields and before its most recent large M&A deals.

Merck’s dividend hike was 11%.  We will make a prediction for the coming hike: ).22 or $0.23 per quarter.  That will translate to a 10% hike or a 15% hike to the dividend payouts.  The current yield of Pfizer is 3.91% based on a share price of $20.45.  Merck’s dividend was raised to $0.42 from $0.38 per quarter, and that translates to a dividend yield today of 4.72% based upon a current price of $35.55.  The old yield at Merck based upon today’s price would still be 4.27%.

The Merck hike alone will have put pressure on Pfizer to hike its dividend.  A 10% hike to $0.22 would generate a dividend yield of 4.30%.  That would have caught it up to the old Merck payout.  A hike to $0.23 per quarter would generate a current dividend yield of 4.5%. If you follow cause and effect theory, or action and reaction theory, Pfizer’s hike is a must.  The boost would still be under or close to 40% of expected income from operations per share to be paid out.

Are there some risks that Pfizer might not raise its dividend?  Yes, but they are just unlikely to matter.  After Merck made the first jump in its dividend in years, Pfizer almost has to follow suit.  Watson Pharmaceuticals, Inc. (NYSE: WPI) is the local outfit which wins from the recent patent expiration of its blockbuster statin Lipitor, and Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is set have a generic version of Lipitor after this coming May.  While Pfizer’s market share on the entire Lipitor market may only be 40% of the past, this patent expiration date had been known for years.

Perhaps the biggest risk to ongoing dividend hikes is not just the endless restructurings of Pfizer, but its major acquisition trail.  That effort has been almost endless.  Its acquisition efforts have also given the company a very wide moat of a drug pipeline ahead and it has insulated its share price from the patent cliff.

At $20.45, Pfizer’s market capitalization rate is $157 billion and its 52-week trading range is $16.59 to $21.45. Merck’s $35.55 price generates a market cap of $108.2 billion and the share price compares to a 52-week range of $29.47 to $37.65.

JON C. OGG

Arch Coal, Inc. (NYSE: ACI) named as Bear of the Day with a $13.00 price target at Zacks.
American Tower Corporation (NYSE: AMT) Started as Outperform at Macquarie.
Berkshire Hathaway Inc. (NYSE: BRK.B) named as Bull of the Day with a $91.00 price target at Zacks.
Cliffs Natural Resources Inc. (NYSE: CLF) Raised to Outperform at Credit Suisse.
Crown Castle International Corporation (NYSE: CCI) Started as Outperform at Macquarie.
Deere & Company (NYSE: DE) named as value stock of the day at Zacks.
Domino’s Pizza, Inc. (NYSE: DPZ) Started as Hold at KeyBanc.
Guess? Inc. (NYSE: GES) Cut to Neutral at Citigroup.
Lowe’s Companies Inc. (NYSE: LOW) Raised to Buy at Goldman Sachs.
Lululemon Athletica Inc. (NASDAQ: LULU) Raised to Buy at KeyBanc.
Sina Corporation (NASDAQ: SINA) Raised to Buy at Deutsche Bank
Smith & Nephew plc (NYSE: SNN) Raised to Overweight at Morgan Stanley.
Western Refining Inc. (NYSE: WNR) Raised to Outperform at Credit Suisse.

Argus made changes to its institutional model portfolio: added shares of Walgreen Co. (NYSE: WAG) and sold out of shares of Sun Life Financial Inc. (NYSE: SLF).

Credit Suisse is out positive on generics saying that the news flow on generic Lipitor has obscured the bigger picture on Watson Pharmaceuticals, Inc. (NYSE: WPI) and Teva Pharmaceutical Industries Limited (NASDAQ: TEVA). The firm recommends buying WPI after its recent weakness as strong fundamentals just got cheaper.  It also recommends buying TEVA for the longer term and as a turnaround story for 2012.

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JON C. OGG

Canaccord Genuity’s specialty pharma analyst Randall Stanicky believes that generics will have 60% market share in 2012.  How the pie is divided is still subject to uncertainty and the analyst sees three possible scenarios:

• Scenario 1 – base case: Watson Pharmaceuticals (NYSE: WPI) and Ranbaxy both launch.  Under this scenario, it has no changes for Watson, Teva, and Mylan and it sees no surprises across the supply chain “where strategies and impact are well vetted.”
• Scenario 2 – modest surprise: TEVA is involved, most likely via a deal with Ranbaxy. Stanicky is not convinced that generic Lipitor is TEVA’s “mystery” product but he continues to see it as an opportunity. This could offer modest upside to TEVA, although the call noted that a generic Lipitor is likely a June 2012 event for TEVA.
• Scenario 3 –  Other less likely scenarios include (1) Ranbaxy’s ANDA is rejected by FDA (or relinquished by Ranbaxy) and others come in; Mylan and TEVA would see an earlier benefit while WPI would be negatively impacted or (2) Ranbaxy is “parked” by the FDA, in which case WPI would benefit both by being alone on the market while TEVA and MYL could see delay to market (we have a hard time seeing the FDA allowing this given focus here.

As far as what others expect from Pfizer, two weeks ago brought a Leerink Swann downgrade where Pfizer was cut to “Market Perform.”  All in all, Thomson Reuters shows a consensus price target objective from analysts as being $23.36.  At $19.35 today, Pfizer’s 52-week range is $16.27 to $21.45.

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) has been battered enough this year that this would be a big deal for its stock if there was a blowout win coming its way.  Instead, shares are only up 0.6% at $38.51 while its 52-week range is $35.00 to $57.08.  It would be up more if everyone thought this was a win for Teva.  Watson Pharmaceuticals, Inc. (NYSE: WPI) is up 3% at $67.80.

JON C. OGG

Aetna Inc. (NYSE: AET) Raised to Conviction Buy List at Goldman Sachs.
AMERIGROUP Corporation (NYSE: AGP) Raised to Buy at Goldman Sachs.
Eni SpA (NYSE: E) Raised to Buy at S&P.
JB Hunt Transport Services Inc. (NASDAQ: JBHT) Cut to Hold at Stifel Nicolaus.
Juniper Networks, Inc. (NYSE: JNPR) Raised to Outperform at RBC.
The Kroger Co. (NYSE: KR) Started as Neutral at JPMorgan.
News Corp. (NASDAQ: NWSA) Started as Neutral at UBS.
RPC, Inc. (NYSE: RES) Raised to Buy at Canaccord Genuity.
Safeway Inc. (NYSE: SWY) Started as Neutral at JPMorgan.
Salesforce.com (NYSE: CRM) Cut to Equal-weight at Global Equities Research.
SanDisk Corporation (NASDAQ: SNDK) Cut to Neutral at Stern Agee; named value stock of the day at Zacks.
Tanger Factory Outlet Centers Inc. (NYSE: SKT) Cut to Neutral at Credit Suisse.
TMS International Corp. (NYSE: TMS) Started as Outperform with $11 target at Credit Suisse.
Vodafone Group Plc (NYSE: VOD) Cut to Underperform as Bear of the Day at Zacks.
Watson Pharmaceuticals, Inc. (NYSE: WPI) named as Bull of the Day at Zacks.
Weyerhaeuser Co. (NYSE: WY) Raised to Hold at Deutsche Bank.
Whole Foods Market Inc. (NASDAQ: WFM) Started as Neutral at JPMorgan.

We also have some more data on analysts and the calendar.  Here are the top analyst upgrades and downgrades of the last week.  We also have the top twelve earnings reports and an economic calendar for what is coming down the pipe this week.

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JON C. OGG

S&P 500 YTD TOP 10 (31Dec10 – 29Sep11)

Ticker

YTD Price Change (%)

Close Price 29Sep11

Close Price 31Dec10

Market Cap($Mil)

Short Interest as % of Shares

69.4

64.13

37.85

6700.9

0.40%

48.8

70.49

47.37

11916.5

9.50%

47.2

313.14

212.66

9815.7

8.70%

46.5

328.37

224.11

39630.3

1.20%

45.7

125.56

86.18

13775.7

3.00%

44.8

373.22

257.75

14586.6

3.50%

40.9

94.46

67.05

22910.9

0.30%

37.5

121.08

88.07

15135.6

1.10%

37.3

70.91

51.65

9511.1

2.10%

37.1

75.07

54.74

12523.9

0.50%

Calpine Corporation (NYSE: CPN) Raised to Buy at BofA/ML.
Computer Sciences Corporation (NYSE: CSC) Cut to Sell at Goldman Sachs.
Duke Energy Corporation (NYSE: DUK) Raised to Neutral at Goldman Sachs.
Exelon Corporation (NYSE: EXC) Raised to Buy at BofA/ML.
FirstEnergy Corporation (NYSE: FE) Raised to Buy at BofA/ML.
General Electric Co. (NYSE: GE) Maintained Outperform but cut estimates at Credit Suisse.
Intuit Inc. (NASDAQ: INTU) Raised to Buy at UBS.
McDonald’s Corporation (NYSE: MCD) Reiterated Outperform and raised target to $97 at Credit Suisse.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Reiterated Buy and raised target to $18 at BofA/ML.
Motorola Solutions Inc. (NYSE: MSI) Raised to Buy at Jefferies.
Pandora Media, Inc. (NYSE: P) Started as Overweight at JPMorgan; Started as Outperform at Wells Fargo; Started as Outperform at William Blair; Started as Buy at Citigroup.
Pan American Silver Corp. (NASDAQ: PAAS) Cut to Hold at Canaccord Genuity.
Pepsico Inc. (NYSE: PEP) Cut to Neutral at Goldman Sachs.
The Travelers Companies (NYSE: TRV) Maintained Underperform as Bear of the Day at Bear of the Day
VAALCO Energy, Inc. (NYSE: EGY) Reiterated Buy as Value at Zacks.
Watson Pharmaceuticals (NYSE: WPI) Raised to Outperform as Bull of the Day at Zacks.

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

Ascent Solar Technologies, inc. (ASTI) is down more than 8% today after the company announced after market a secondary offering of shares.

Cisco Systems, Inc. (NASDAQ: CSCO) posted slight gains yesterday, but is down significantly today on heavy volume after its CEO projected slow growth for “the next several quarters.” At $20.47, the stock is close to its 52-week low of $19.82.

China Grentech Corporation Limited (NASDAQ: GRRF) is one of today’s biggest movers. Shares of GRRF have increased more than 25% to $3.65 (relative to a 52-week range of $1.51-$5.35) after an impressive 3Q earnings report after yesterday’s close.

Dendreon Corporation (NASDAQ: DNDN) is up nearly 7% premarket on heavy volume.

Juniper Networks Inc. (JNPR US) is down 8.7 percent, mostly on the CSCO news.

Sonic Solutions (NASDAQ: SNIC) gained more than 7% after market close yesterday, those gains have held so far. The stock, at $11.10, is trading within a 52-week range of $6.76-$14.02.

Watson Pharmaceuticals Inc. (WPI US) has taken a moderate loss premarket after announcing its second-largest holder would be selling more than 10 million shares. Shares of WPI are trading within a 52-week range of $35.08-$52.01.

We did not cover any earnings previews this week on The Unusual Suspects.  We gave a detailed preview on the major earnings reports on deck this week.  Those include tickers LOW, HD, WMT, TGT, SHLD, DLTR, HPQ, and DELL.  We also tracked much of the usual options volume from Friday in individual names in case it was a prelude to something large.  We saw unusual options trading in the tickers NLY, COCO, HPQ, PCS, NTAP, NFLX, PHM, and SUN.  Here are the eight best IPOs of 2010.  Also listed were three of our top defensive stock picks which can still grow if we enter into a new bear market.

Apple Inc. (NASDAQ: AAPL) may not get clipped too hard on this because of the cult-like love from the public.  The reports from the weekend show an Apple manager getting a grand jury indictment over kickbacks from suppliers.  Couple this with the labor problems of contract companies and the handling the Steve Jobs health disclosures of 2009 and the recent iPhone issues, its “clean transparency” could become a real issue if any more lapses of judgment come to light.  The problem is that Apple is now 10% off of recent highs, so the bargain hunters may have more of an argument than the naysayers.  Food for thought.

Ameristar Casinos Inc. (NASDAQ: ASCA) confirmed late last week that it is considering strategic alternatives which could include a sale of the company.  TheStreet.com ran a poll showing that Boyd Gaming was the likely buyer, but we’d throw out there that Ameristar’s $1 billion market cal after a 1.76% gain on Friday leaves it in an easy category that would allow private equity or traditional casinos to bid.  At $17.36, the 52-week range is $13.44 to $20.69.

Coinstar Inc. (NASDAQ: CSTR) was listed in Barron’s as a stock which could rise from $44 to $60 over the next year and perhaps to $80 by 2013. In a market neutral scenario this could be up 3% on Monday morning.

Johnson Controls Inc. (NYSE: JCI) was given the cover story for this weekend in Barron’s called “Totally In Control.” Mike Santoli said it is greening investors’ wallets and  is a promising play on an auto revival and a cleaner world.  With this being the cover story, in a market neutral scenario it could be up 2% to 3%.

Netflix Inc. (NASDAQ: NFLX) was listed as the #1 pole position chart in IBD this weekend. A 12% gain this last week despite a drop of -0.6% Friday to $132.26 was hard to ignore when you consider how poor the markets were last week.

Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is getting close to a 52-week low as the market pulls back.  We covered this one twice on Friday and have more in-depth analysis coming this week.  This alone may not be a catalyst and admittedly weak stocks tend to stay weak until a critical point is reached.  For long-term investors, Teva looks like one that should be one of the safer defensive stocks that still offers growth during a bear market.

Watson Pharmaceuticals Inc. (NYSE: WPI) is the apparent beneficiary of a new emergency contraceptive approved by the FDA.  HRA Pharma won approval and Watson will manufacture the drug.  With Watson’s market cap only at $5.2 billion, this is potentially going to be close to free new business for Watson.

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

JON C. OGG

BP plc (NYSE: BP) defended at Bank of America Merrill Lynch.
Charles Schwab Corp. (NASDAQ: SCHW) Started as Overweight at JPMorgan.
Compucredit Corp. (NASDAQ: CCRT) Cut to Underperform at KBW.
Limited Brands Inc. (NYSE: LTD) Raised to Overweight at JPMorgan.
McKesson Corporation (NYSE: MCK) reiterated Buy and Raised target to $80 at Auriga.
Metals USA Holdings Corp. (NYSE: MUSA) Started as Overweight at JPMorgan; Started as Buy at KeyBanc.
Neteaste.com, Inc. (NASDAQ: NTES) Reiterate Buy and $49 price target at Auriga.
Portugal Telecom (NYSE: PT) Cut to Neutral at BNP Paribas.
Vimpel-Communications (NYSE: VIP) Started as BUy and $24 target at UBS.
Watson Pharmaceuticals (NYSE: WPI) Raised to Overweight at JPMorgan.

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

JON C. OGG