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Stock Upgrades, Downgrades from TheStreet.com Ratings

By TheStreet.com Ratings Staff
11/14/2007 1:02 PM EST
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Each weekday, TheStreet.com Ratings updates its ratings on the stocks it covers. The proprietary ratings model projects a stock's total return potential over a 12-month period, including both price appreciation and dividends. Buy, hold or sell ratings designate how the Ratings group expects these stocks to perform against a general benchmark of the equities market and interest rates.


While the ratings model is quantitative, it uses both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and company earnings forecasts. Objective elements include volatility of past operating revenue, financial strength and company cash flows.
Sun Microsystems (JAVA - Cramer's Take - Stockpickr) provides network computing infrastructure products and services. It has been downgraded to a hold from a buy. The company swung to a gain of 12 cents per share in its fiscal first quarter from a loss of 8 cents a share a year earlier. It has demonstrated a pattern of positive EPS growth over the past two years, a trend that should continue. This trend suggests that the business is improving. Sun Microsystems also shows compelling net income growth.

However, the company's stock has declined by 2.71% in the last 12 months. Looking ahead, other than the push and pull of the broad market, TheStreet.com Ratings does not see anything in the company's numbers that will reverse the decline. Moreover, despite the decline, the stock is selling for more than most others in its industry. Sun Microsystems had been rated a buy since September 2007.

Genworth Financial (GNW - Cramer's Take - Stockpickr) sells insurance and investment-related products and services through three segments: protection, retirement income and investments, and mortgage insurance. It has been downgraded to a hold from a buy.

The company's revenue grew by 9.9% in the third quarter compared with the same period last year, yet this trailed the industry average of 18.1%. Its earnings improved by 20.6% to 76 cents per share during the same timeframe, continuing a pattern of positive EPS growth over the past two years. Genworth's debt-to-equity ratio of 0.58 is higher than that of the industry average.

Its stock has declined 21.22% in the past 12 months, and while the price drop could be one of the factors that may help make the stock attractive down the road, right now TheStreet.com Ratings believes it is too soon to buy. Genworth had been rated a buy since November 2006.

Electronic Data Systems (EDS - Cramer's Take - Stockpickr) offers infrastructure services such as hosting, workplace, storage, security and privacy, and communications. It has been downgraded to a hold from a buy.

The company's third-quarter earnings increased to 42 cents per share compared with 25 cents a share during the same period last year. This continued a pattern of positive EPS growth over the past two years, a trend that should continue. EDS' debt-to-equity ratio of 0.39 is low, but still higher than the industry average. Still, the company's quick ratio of 1.36 is sturdy.

Electronic Data Systems' stock price has dropped by 25.41% in the last 12 months, as investors have failed to pay much attention to the company's earnings improvements. However, right now TheStreet.com Ratings believes it is too soon to buy. Electronic Data Systems had been rated a buy since November 2006.

Itron (ITRI - Cramer's Take - Stockpickr) provides meters and meter-reading technology to energy and water providers. It has been downgraded to a hold from a buy. The company's revenue increased by 163.5% in the third quarter compared with the same period last year, and its stock price has grown by 53.37% in the last 12 months.

However, its earnings swung to a loss of 11 cents per share in the third quarter compared with a gain of 35 cents a share in the same period last year, and its return on equity decreased greatly during the same timeframe. Itron had been rated a buy since July 2006.

TheStreet.com Ratings has initiated coverage of Qimonda AG (QI - Cramer's Take - Stockpickr), which sells semiconductor memory products in Germany and other parts of Europe, North America and Asia. It has been rated a sell.

The company swung to a loss of $376 million in the fiscal fourth quarter compared with a profit of $199 million in the same period last year. Its gross profit margin is extremely low at 12%, and has decreased significantly from the same period last year. Qimonda's earnings per share swung to a loss of $1.11 from a gain of 62 cents a share in the same period last year. Its revenue fell by 21.2% during in the same timeframe. Qimonda's stock price is down by 40.49% in the last 12 months.

http://www.thestreet.com/_yahoo/newsanalysis/ratings/10390112.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Stock Upgrades, Downgrades
Ticker Company Name Change New Rating Former Rating
API Advanced Photonix Upgrade Hold Sell
CHNL Channell Commercial Downgrade Sell Hold
CMGID CMGI Upgrade Hold Sell
DBLE Double Eagle Petroleum Downgrade Sell Hold
EDS Electronic Data Systems Downgrade Hold Buy
ETH Ethan Allen Interiors Downgrade Hold Buy
GW Grey Wolf Downgrade Hold Buy
GPI Group 1 Automotive Downgrade Hold Buy
HIHO Highway Holdings Downgrade Hold Buy
ITRI Itron Downgrade Hold Buy
LCCI LCC International Downgrade Sell Hold
MLHR Miller (Herman) Downgrade Hold Buy
MPS MPS Group Downgrade Hold Buy
QSC Questcor Pharmaceuticals Upgrade Hold Sell
RIC Richmont Mines Downgrade Hold Buy
JAVAD Sun Microsystems Downgrade Hold Buy
SYS SYS Upgrade Hold Sell
ABXA ABX Air Downgrade Hold Buy
GNW Genworth Financial Downgrade Hold Buy
SHO Sunstone Upgrade Hold Sell
BBG Bill Barrett Downgrade Hold Buy
HERO Hercules Offshore Downgrade Sell Hold
AMCP Amcomp Upgrade Hold Sell
GEOY Geoeye Upgrade Buy Hold
CBF CBRE Realty Finance Initiation Sell n/a
OSIR Osiris Therapeutics Initiation Sell n/a
QI Qimonda AG Initiation Sell n/a