MOST NOTEWORTHY: Fiserv, Arbitron and Anadarko Petroleum were today's noteworthy upgrades:
JMP Securities upgraded Fiserv (NASDAQ: FISV) to Outperform from Market Perform citing a reversal of the Bank of America in-house risk, potential re-branding initiatives, and relative pricing stability.
Bear upgraded Arbitron (NYSE: ARB) to Outperform from Peer Perform citing PPM earnings growth potential, strong industry position, defensive nature of shares, and it views the company as an acquisition target.
Lehman raised Anadarko Petroleum (NYSE: APC) to Overweight from Equal Weight citing relative valuation and strong U.S. gas exposure.
OTHER UPGRADES:
Goldman added Wal-Mart (NYSE: WMT) to its Conviction Buy List.
Coinstar (NASDAQ: CSTR) offers North American and U.K. retailers a range of storefront service and entertainment devices. These include coin counters, kiddie rides, bulk vending machines, skill-crane games and point-of-sale terminals. The firm also provides self-service DVD movie rental/purchase kiosks and provides money transfer services, prepaid wireless products, stored value cards, payroll cards and prepaid debit cards. Coinstar products and services are distributed through more than 53,000 retail stores. Corporate clients include Wal-Mart (NYSE: WMT), Kroger (NYSE: KR) and Walgreen (NYSE: WAG).
The company surprised the Street last week, when it reported Q1 EPS of 18 cents and revenues of $190.5 million. Analysts had been expecting four cents and $182.7 million. Management also guided Q2 EPS to 8-15 cents (12 cent consensus), Q2 revenues to $200-$210 million ($202.19M consensus), FY08 EPS to 60-75 cents (57 cent consensus) and FY08 revenues to $850-$900 million ($829.83M consensus). DA Davidson subsequently upgraded the stock to "buy".
ThinkPanmure has upgraded VMWare (NYSE: VMW) to "buy" from "accumulate," according toBriefing.com. The financial news service also reports that Merrill Lynch has upgraded Kroger (NYSE: KR) to "buy" from "neutral."
Citi Investment Research reiterated its "hold" on Molex (NASDAQ: MOLX) saying that "high raw material costs may weigh on earnings," according to the AP.
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: UBS AG, KLA-Tencor and Level 3 Comm were today's noteworthy downgrades:
Keefe Bruyette downgraded shares of UBS (NYSE: UBS) to Underperform from Market Perform as they expect as they expect further write-downs to erase profits in 2008.
Oppenheimer downgraded shares of KLA-Tencor (NASDAQ: KLAC) to Underperform from Perform after checks indicated Intel (NASDAQ: INTC) has chosen Applied Materials' (NASDAQ: AMAT) reticle inspection tool for its entire 32nm node after a long period of evaluation against KLA-Tencor. Oppenheimer believes this represents a $300M shift from KLA-Tencor's dominant market share in reticle inspection.
Jefferies cut Level 3 Communications (NASDAQ: LVLT) to Hold from Buy as they see limited opportunity for near-term share appreciation given the company's integration challenges and the added uncertainty from recent management changes.
OTHER DOWNGRADES:
Keefe Bruyette downgraded Credit Suisse (NYSE: CS) to Market Perform from Outperform.
Kroger (NYSE: KR) was downgraded to Underweight from Neutral at JP Morgan.
Shares of Cincinnati-based Kroger Co. (NYSE: KR), the nation's largest traditional grocery chain, fell 74 cents to $24.90 in morning trading as the company reported that its fourth-quarter profit slumped 16%. Though overall sales rose 2%, results were dragged down by a large inventory charge.
Kroger posted earnings of $322.9 million, or 48 cents per share, for the quarter that ended February 2, compared with a profit of $384.8 million, or 54 cents per share, a year earlier. Revenue in the quarter rose to $17.23 billion from $16.86 billion a year ago. Analysts surveyed by Thomson Financial had expected earnings of 47 cents per share on revenue of $16.81 billion.
Kroger blamed the higher-than-expected inventory charge of five cents per share on inflation, and also said that the previous year's quarterly earnings were boosted by a tax benefit.
WellPoint (NYSE: WLP) stock is declining 16.7% in premarket trading after the health insurer on Monday cut its 2008 profit outlook. Higher costs and disappointing enrollment as well as worsening economic conditions were cited by the company as the reasons. Meanwhile, Aetna (NYSE: AET) shares are down 7.5% in premarket trading after it too gave a 2008 outlook below analysts' estimates.
Shares in Nokia Corp. (NYSE: NOK) are slumping nearly 5% in premarket trading after Texas Instruments (NYSE: TXN) said one of its key clients, which it didn't name, has cut plans for 3G phone making for March. While Nokia is TI's biggest client for mobile chips, Sony Ericsson is another. Still, some believe the customer could be Motorola Inc. (NYSE: MOT), which has been losing market share.
Kroger Co. (NYSE: KR) is set to post fourth quarter earnings today and is expected to report earnings of 47 cents a share.
Private equity giant Blackstone Group (NYSE: BX) and leading grocery chain Kroger Co. (NYSE: KR) are scheduled to report earnings this week. Here's a quick peek at them ahead of results.
Blackstone went public in 2007 and has yet to beat earnings estimates. When the company reported third-quarter results back in November, earnings came to 21 cents per share, well below the consensus forecast of analysts polled by Thomson Financial of 30 cents, as well as the previous quarter's earnings of 46 cents (its first report after the IPO). For the current quarter, analysts expect only 19 cents per share, and $1.47 for the year.
The analysts' consensus recommendation is to buy Blackstone, with 3 of 8 analysts rating it a strong buy. Shares have fallen since the IPO to a low of $14.16 last week, but closed Friday at $14.58.
For news about Blackstone that could influence the earnings results, see BloggingStocks' Blackstone coverage.
Radiant Systems (NASDAQ: RADS) provides hardware systems and software used to manage site operations in a variety of retail settings. Products include touch-screen point-of-sale devices, self-service kiosks, integrated back-office systems and centralized data management systems designed for use in restaurants, cinemas, convenience stores and general retail locations. Customers include Exxon Mobil (NYSE: XOM), Home Depot (NYSE: HD) and Kroger (NYSE: KR).
Investors were pleased last week, when SunTrust offered a positive assessment of the firm's prospects and then the company issued a positive quarterly summary. Management reported Q4 EPS of 27 cents and revenues of $70.3 million. Analysts had been expecting 22 cents and $68.9 million. The company also guided Q1 EPS to 15-16 cents (16 cent consensus), Q1 revenues to $60-$70 million ($63.61M consensus), FY08 EPS to 84-86 cents (76 cent consensus) and FY08 revenues to $305-$308 million ($282.45M consensus). Wedbush Morgan subsequently reiterated its "buy" rating on the shares.
Wayne Watson, the man who ate at least two bags of microwave popcorn a day for years and developed "popcorn lung" is now suing The Kroger Co. (NYSE: KR) . Popcorn lung is the name given to the lung condition bronchiolitis obliterans, which is linked to the flavor chemical diacetyl. The lawsuit claims that Kroger "failed to warn that preparing microwave popcorn in a microwave oven as intended and smelling the buttery aroma could expose the consumer to an inhalation hazard and a risk of lung injury."
This isn't the only lawsuit over diacetyl flavoring. A lawsuit is currently pending on behalf of workers at a factory in Missouri who mixed large vats of flavors. They say hundreds of workers now have lung disease and respiratory illnesses from inhaling the flavoring. Interestingly enough, the chemical actually is a natural substance that gives butter its flavor. It is also found in some cheeses and wines. Microwave popcorn makers say their formulae are being changed to remove this flavoring from the product.
The market's choppy / consolidating pattern continues, suggesting the need for a defensive play or two (or perhaps more) as the new year begins. Further, there are few defensive plays better than a grocery store chain, and in this category Kroger is worth a review.
The Kroger Co. (NYSE: KR) is the nation's largest grocery chain, boasting more than 2,400 stores, with the typical format being food/drug store combination stores.
Analysts see modest sales growth in 2008 of 4-7% but margins should widen, due to Kroger's ability to pass on product cost increases, and a more-modest advertising budget.
In general, analysts also sense that Kroger is in-tune with competitive pressures in the grocery chain segment - - improving customer service levels and the overall shopping experience. Further, look for KR's private label items to play a larger role in revenue, particularly as some consumers switch down to generic brands in 2008 to reduce their food costs. The Reuters FY 2008/FY 2009 EPS consensus estimates for KR are $1.69 to $1.89.
Mammoth grocery-store chain The Kroger Co. (NYSE: KR) recently posted very solid third quarter (3Q) results. Total sales increased 10% to $16 billion for the quarter. This marks the 10th quarter in a row that Kroger has posted sales increases of at least 3%. Year-to-date (YTD) total sales increased 7.6% to $53 billion. 3Q net earnings were equally impressive, $253.8 million or $0.37 per diluted share. This represents a $39 million improvement over 3Q 2006 net earnings. Grocery stores have notoriously low profit margins, so it speaks well of Kroger management that Kroger earned these good numbers while increasing profit margins slightly, expanding capital investment to $555 million, growing its own line of organic goods, while simultaneously decreasing general administrative expenses.
YTD net earnings stand at $857.6 million or $1.22 per diluted share, a 20% increase over 2006 results. Given the strong comparable stores sales growth, Kroger CEO David Dillon has raised FY 2007 guidance to reflect 5% overall sales growth, which will exceed the previous guidance figure of $1.67 per diluted share. Kroger repurchased 16.5 million shares in 3Q 2007, for a total of $442 million, with $200 million leftover for 4Q buybacks.
Investors were perhaps hoping for even better news from Kroger. The stock lost over 8% of its value in the previous week, and closed at $25.88 on 19 December, down $0.29.
Bear upgraded American Eagle Outfitters (NYSE: AEO) to Outperform from Peer Perform, citing positive risk/reward given its favorable positioning relative to the teen sub-sector, sustainable margins, and healthy balance sheet.
OTHER UPGRADES:
Kroger Co. (NYSE: KR) was upgraded to Outperform from Neutral at Credit Suisse.
Citigroup downgraded ratings of Bank of America (NYSE: BAC), Wachovia (NYSE: WB), Wells Fargo (NYSE: WFC), Countrywide Financial (NYSE: CFC), JP Morgan Chase (NYSE: JPM) and others.
Kroger (NYSE: KR) was upgraded by Credit Suisse from Neutral to Outperform, setting a target price of $32.
RBC Capital Markets downgraded Starbucks (NASDAQ: SBUX) from Outperform to Sector Perform.
UBS upped its target price on market darling Apple Inc. (NASDAQ: AAPL) from $220 to $235.
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MOST NOTEWORTHY: Fiserv, Arbitron and Anadarko Petroleum were today's noteworthy upgrades:
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Shares of Cincinnati-based 
Blackstone went public in 2007 and 
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