div style="text-align: justify;"Credit Suisse is out downgrading span style="font-weight: bold;"American International Group (NYSE:AIG)/span to Underperform from Neutral while lowering target to $15 (prev. $30).br /br /Firm notes they are lowering their 2009E to -$13.98 ($2.80 for 2H09) and initiating a 2010E at $5.70.br /br /span style="font-weight: bold;"CSFB's Underperform rating reflects: /span1) Near term monetization of value of businesses suggests little to no value for common equity, 2) book value analysis suggests mid-teens stock, 3) distressed tender of hybrids – a book value and recap opportunity, 4) normalized capital structure yields annual EPS of $1.50 to $2.50, 5) upside-down capital structure with large debt load vs. common equity, 6) ample liquidity, but near term debt maturities may increase reliance on fed line, and 7) use of government funds.br /br /span style="font-weight: bold;"New CEO Benmosche a positive, but low probability of meaningful common equity value: /spanThe recent rally of some of the ...

div style="text-align: justify;"span style="font-weight: bold;"PetSmart (NASDAQ:PETM)/span is getting at least 2 downgrades this morning following weaker than expected results and guidance out last night:br /br /span style="font-weight: bold;"- Credit Suisse/span is downgrading PETM to Neutral from Outperform as, unlike other industry leaders, PETM is not only seeing sales slow, but is seeing margins decline as its mix deteriorates. Taking away the earnings upside moves PETM down on firm's investment attractiveness scale. Firm is lowering their price target to $21.br /br /span style="font-weight: bold;"Investment case:/span PetSmart has always been a tween’er that has moved on its own results. It does not offer the cyclicality due to its food sales that investors looking for an economic uplift can find in many of firm's names. Nor does it offer the secular story that CSFB's DIY auto names do. However, the growth of services, lower expense growth and premium food inflation seemed enough to ...

div style="text-align: justify;"span style="font-weight: bold;"First Solar (NASDAQ:FSLR) /spanis getting downgraded to Neutral from Outperform at Credit Suisse this morning following earnings out last night. The firm is lowering their target to $135 (prev. $200).br /br /Earnings momentum peaking. While there has been a widespread concern on FSLR’s margins, FSLR’s stock in the meantime has benefited from its consistent track record of beat and raise quarters in the past. While CSFB expected upside to the quarter, FSLR's reported Q2 results were well above consensus. However, they think Q3 will be the last good quarter for a while for similar upside surprises; and they expect a period where estimate resets are asymmetrically skewed to the downside as we move into 2010. span style="font-weight: bold;"Firm expects the stock to look ahead of this peaking earnings momentum and pull back to lower levels./spanbr /br /span style="font-weight: bold;"Reasons for downgrade (short summary): /spanbr /br /1) ...

Credit Suisse Asia team is downgrading span style="font-weight: bold;"Baidu.com (NASDAQ:BIDU)/span to Underperform from Neutral this mroning. Their price target is $250 (prev. $200).br /div style="text-align: justify;"br /span style="color: rgb(255, 0, 0); font-weight: bold;"According to firm's industry sources, performance of Phoneix Nest is not yet satisfactory. They believe the launch of Phoneix Nest has not replaced the Classic P4P system yet, and substantial amount of Baidu revenue is still generated by Classic P4P./spanbr /br /Phoneix Nest, Baidu’s new advertising system, was officially launched on 20 April. Market believed Phoneix Nest will be a short-term growth driver, and expected Phoenix Nest will totally replace Classic P4P system soon. However, according to industry sources, performance of Phoneix Nest is not yet satisfactory. Also, Baidu announced that, starting from 15 June, two types of keywords are restricted to be advertised on Phoneix Nest only: 1) Professional keywords and 2) keywords with limited business value. ...

Credit Suisse is upgradingspan style="font-weight: bold;" Esterline Technologies (NYSE:ESL)/span to Outperform from Neutral while raising their tgt to $43 (prev. $32).br /div style="text-align: justify;"br /While ESL has strong breadth across the typically late-cycle aerodefense market, the firm thinks its 18% sales (higher % for EBIT) exposure to comm’l aftermarket will allow it to benefit from the nearer-term recovery in spares demand that they anticipate in 2010. Thus the firm sees a single down EPS year in ‘09 as ESL’s diverse markets and acquisitive strategy should drive growth thereafter.br /br /span style="font-weight: bold;"A Volatile Chart: /spanThe Feb. sell-off to $20 traces to an abnormally soft FQ1 (Dec) of $0.38 which startled investors following 8 prior qtrs averaging $0.93 (albeit w/ volatility). The mkt rightfully questioned ESL’s $3.70-$3.90 FY09 guidance after it delivered only 10% in FQ1. However, since then, airline traffic seems to be near bottom, and markets are now considering ...

div style="text-align: justify;"Credit Suisse is upgrading span style="font-weight: bold;"Dryships (NASDAQ:DRYS) /spanto Outperform (previously Underperform) and increasing their target price to $8 (previously $5). Firm believes DRYS rig assets are being ignored by investors. While they expect oil prices to remain volatile, the recent oil price surge should help DRYS secure contracts for its speculative drillships which should in-turn help DRYS secure financing on its two un-financed drillships. While the timing of any new rig contracts remains uncertain they expect DRYS to fix 1-2 rigs on long term contracts later this year.br //divdiv style="text-align: justify;"br /span style="font-weight: bold;"- They caution DRYS is not for the faint of heart and concerns remain about future equity issuances. /spanDRYS raised $1.1 billion over the last 6 months (more than quadrupling its share count) and while highly dilutive it put DRYS balance sheet on stable ground. It is possible DRYS may tap the equity markets ...

Credit Suisse is upgrading span style="font-weight: bold;"XL Capital (NYSE:XL)/span to Outperform from Neutral while raising target to $18 (prev. $13).br /div style="text-align: justify;"br /Analyst notes they are upgrading XL for 2 reasons:br /br /span style="font-weight: bold;"- 1. Improving fixed income markets should lead to/spanspan style="font-weight: bold;" a strengthening capital position./span CSFB believes it is unlikely that the company will raise capital even if fixed income markets deteriorate significantly.br /br /span style="font-weight: bold;"- 2. Firm believes that XL's Franchise is stabilizing with lower top line declines going forward and underwriters continuing to maintain pricing discipline./span In their view, a stronger capital position and stabilization in the franchise could lead to the removal of the negative ratings outlook by rating agencies in 6-12 months which should lead to an improvement in valuation from distressed levels as investors focus more on book value growth rather than the company's survival. As fixed income markets ...

div style="text-align: justify;"Deutsche Bank is out very positive onspan style="font-weight: bold;" Hartford Financial (NYSE:HIG)/span saying the new TARP and equity capital insulates the company from significant credit and equity market deterioration. The stock at 25% of book (x-AOCI) is suggesting almost zero value for the life insurance operations. span style="font-weight: bold;"Based on Deutsche's updated valuation analysis, they maintain their 1-year target price of $19 but they believe The Hartford stock offers potentially more than 100% upside over a three-year period./span Despite the capital and ratings volatility the company’s franchise remains intact, and we should have clarity on management succession within six months.br /br /span style="font-weight: bold;"New capital provides meaningful cushion/spanbr /Deutsche Bank estimates The Hartford can withstand significant credit deterioration (losses of 11% of risk-weighted assets over a three-year period) and a further equity market decline (down 25% to Samp;P at 700) following the new capital of $3.4 billion of ...

div style=”text-align: justify;”span style=”font-weight: bold;”Lincoln National (NYSE:LNC)/span is getting positive vibes from several tier-1 firms this morning:br /br /span style=”font-weight: bold;”- CSFB /spanis upgrading their rating to Outperform from Neutral and moving their price tgt to $24 (prev. $21).br /br /The upgrade comes following LNC’s capital raise and the announced plans to issue preferred stock to the US Treasury. While the planned $950 million of CPP leaves a clear overhang on the shares, given the likelihood of a future equity raise to repay the CPP, the firm thinks the stock is trading at too large of a discount relative to the risk of future dilution and other potential franchise risks associated with having the government as a key stakeholder.br /br /CSFB’s main points of distinction vs. the other expected CPP recipient, HIG, are that: 1. LNC’s balance sheet problems are more modest in size for both credit and equity sensitivity, …

div style="text-align: justify;"Credit Suisse notesspan style="font-weight: bold;" Roche and GSK/span could see an EPS benefit of ca 0.5% for every incrementalbr /$200M of flu related sales. Roche/Chugai/Gilead are the most likely to benefit (through increased Tamiflu sales) although GSK may also gain (through increased Relenza sales). In the longer-term, companies with pandemic flu vaccine know how may be able to develop a pandemic vaccine, and we may also see an increase in overall influenza vaccines. The main pandemic and seasonal manufacturers are GSK, Sanofi- Aventis and Novartis.br /br /span style="font-weight: bold;"Mexico is in the midst of a flu outbreak which is believed to be due to a novel strain of swine flu (H1N1). /spanSwine flu is typically not transmissible from human to human but in this case appears to have become transmissible. Given its novelty compared to prior influenza viruses in humans, it appears to be relatively more severe than ...