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Analyst Upgrades/Downgrades

Slovenian Rating Cut to A- by S&P on Banking Bailout

“Slovenia’s credit rating was cut to A- as the government’s announced support for state-owned banks will lead to higher-than-previously forecast debt, Standard & Poor’s said.

The rating was reduced from A, S&P said in a statement late yesterday. The outlook on the nation’s long-term rating is stable. The A- assessment is on a par with Poland and Malaysia.

“The downgrade reflects Slovenia’s higher-than-anticipated debt burden, due to its announced support of its state-owned banks,” S&P said in the statement. “We also observe rising policy-implementation risks to resolving economic and fiscal pressures.”

Slovenia, on the brink of becoming the sixth euro member to ask for a bailout, has drafted a 4 billion-euro ($5.4 billion) bank recapitalization plan that would take up bad loans from ailing lenders. The proposal may be derailed by early elections as a political crisis deepens over corruption allegations against Prime Minister Janez Jansa.

The yield on the nation’s dollar-denominated debt maturing in 2022 dropped 9 basis points from yesterday to 5.049 percent at 12:33 p.m. in Ljubljana, according to data compiled by Bloomberg.

Debt Increase…”

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Moody’s: Downside Risks for Global Economy Had Abated

Source 

“SYDNEY (Reuters) – Moody’s Investor Services on Tuesday said downside risks for the global economy had receded in the past three months, though a number of dangers still remained.

In its latest Global Macro Risk Scenarios report, the ratings agency also said it expected economic growth to be slow in many countries.

“While our central forecasts are little changed, the downside risks have definitely abated over the past three months,” said Colin Ellis, Moody’s Senior Vice President for Macro Financial Analysis.

“However, we still expect a subdued global recovery with sub-trend growth in most advanced economies over the near term, alongside a relatively soft pace of expansion in emerging markets as well.”

The ratings agency expects real growth for the G20 of around 2.9 percent in 2013, followed by 3.3 percent in 2014. It forecast growth in the United States this year, but expected the euro area as a whole to stagnate during 2013.”

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$GS Issues a Lower Rating for Equities in the Near Term

“$GS has lowered its rating on equities in general, although this is really just over the near term rather than in the long term. The near-term rating has been cut to Neutral from Overweight for a three-month outlook. Goldman Sachs said that the recent gains in equities need time to be digested by the markets, as the chances for a strong rally to continue have lowered on the heels of such large gains since the end of 2012.

Goldman Sachs is maintaining strong conviction on the long-term outlook, and again this downgrade is based on the near term. Asset prices have appreciated to the point that they are fully priced, based on the firm’s near-term expectations and price targets.

For a 12-month outlook, the firm maintains an Overweight stance…..”

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$BAC Puts Out a Secular Growth Stock List for Your Consideration

“The negative fourth-quarter gross domestic product (GDP) reading of -0.1% caught most Wall St. analysts and economists by surprise. This unforeseen number was skewed by a huge decrease in government spending. Most now expect the number to be revised to a positive reading, and the first quarter to show 1% to 2% growth. This slow growth scenario is just the right playing field for Bank of America Corp. (NYSE: BAC) secular growth stock picks.

In the past, when U.S. GDP growth was between 0% and 2%, the secular universe outperformed the rest of the Russell 2000 by 3.2% over the subsequent six months and by 7.2% over the next 12 months. The Bank of America/Merrill Lynch team screened the Russell 2000 and the Russell Midcap looking for stocks that met their secular growth definition. These are names with lower-than-average variability of earnings, and they are expected to deliver 10% to 20% earningsgrowth over the next three to five years.

We looked for the top four stocks in their small and midcap secular growth universe with the highest earnings growth rates. In the mid cap stocks, the top four stocks Bank of America has a Buy rating on are….”

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Citi Says Solar Stocks are Ready to Outperform

“The sun is set to shine brighter for some solar investors, according to a new Citigroup report.

Citigroup expects a surge in demand for solar energy, MarketWatch reports, noting that the brokerage firm sees a number of seemingly positive fundamentals for the industry.

For example, over the past five years, installations grew at a compounded annualized rate of 59 percent, according to MarketWatch. Then too, there is the political drive for cleaner energy and the rising costs of fuel.

“Key point, many of the U.S. utilities we have surveyed over the past several weeks have highlighted the need to diversify into other generation sources — it is well understood that gas prices won’t stay depressed forever,” the reports states.

Yet, the positive fundamentals do not appear to be priced into the shares of solar companies.

And perhaps rightfully so in the case of some companies, according to Citigroup analyst Shahriar Pourreza, author of the report.

Playing the solar market at this point is about looking at which segment of the business has the sunniest outlook.

As Forbes points out, Pourreza initiated coverage of seven companies, but stamped buy ratings on only four of them…..”

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$BAC: Strong Earnings Will Push S&P 500 to 1,600 This Year

“This will be another year of buoyant earnings, sending the Standard & Poor’s 500 Index up to 1,600 by year-end, according to Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America.

That would represent a 7 percent gain from Monday’s close of 1,495.71, and a 12 percent increase for the year.

“The big surprise for the U.S. equity market is that we might not see a pullback this year, despite what many in the markets are expecting,” Subramanian tells CNBC, noting that the market can avoid its typical 5 percent correction.

Of the 264 S&P 500 companies that had reported earnings as of Monday’s close, about 73 percent beat analysts’ profit forecasts, and 66 percent beat analyst’s sales projections, according to Bloomberg data….”

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$BAC Expects New Highs for $FDX as They Add Them to Their Focus List

“FedEx Corp. (NYSE: FDX) may be about to become a huge beneficiary of the transportation catch-up boom taking place in America and elsewhere. Bank of America/Merrill Lynch has added the shipping and transport giant to its prized US 1 List, which is the equivalent to what investors know as a Conviction Buy List.

FedEx shares remain one of BofA’s top transportation stocks. The firm noted that it trades at only 12.7 times its fiscal 2014 earnings per share estimates. This is said to be under the historical 13 times to 20 times one-standard deviation trading range.

BofA said:

Earlier this month, we highlighted improving freight data from Asia, including Hong Kong Air Cargo Terminals, as well as accelerating China port volumes, which we believe drove a large portion of FDX’s 12% gain year-to-date. FedEx posted its first uptick in International Priority volumes in 5 quarters in its F2Q13. Last week, UPS noted that in the U.S., January started off stronger than it expected, Europe is more stable than last year and is improving, and Asia global growth trends have returned to more normal trends. We believe the upside from FedEx’s $1.7 billion profit improvement plan, which should gain visibility in May, is just beginning to make inroads with investors, and provides upside potential….”

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S&P Cuts Monte Paschi Rating Over Growing Loss Concerns

Banca Monte dei Paschi di Siena SpA, the Italian lender facing a criminal probe into money-losing structured deals, had its credit rating cut by Standard & Poor’s on concern the investigation may lead to bigger losses.

The losses “may be higher than initially anticipated” and demonstrate “a risk of management weaknesses,” S&P said in a statement late yesterday. The Siena-based lender had its long- term grade cut to BB from BB+ and remains on watch negative, which means the company may be downgraded again. Shares fell as much as 2.9 percent in Milan trading today….”

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Raymond James Becomes Cautious on the Restaurant Industry

“The sheer amount of competition in the casual dining sector over that past 20 years has been great for the American consumer. The copycat strategies employed by competitors have made it possible for a couple to go to any number of reasonably good restaurants and get two complete meals for as low as $20. However, rising prices and taxes may begin to put a crimp in some of the companies’ earnings.

The analysts at Tampa-based Raymond James Financial Inc. (NYSE: RJF) are reasonably positive on the fourth-quarter results for most of the restaurants on which they have research coverage. In the casual dining arena, they expect comparable sales to be slightly positive and cost pressures to remain modest. With changes coming in the first quarter of 2013, they are starting to temper their expectations.

The first quarter of 2013 begins a period of rising uncertainty for both sales and costs, and elevated uncertainty seems likely to remain in place for some time. The same period last year saw the strongest restaurant sales growth of the entire year, helped by very favorable weather. This fact, when combined with the demand destruction they expect from the recently enacted payroll tax increase, could put first-quarter 2013 comparable sales into the red for some companies they cover. When combined with the rising food inflation outlook for 2013, the potential for negative earnings per share (EPS) revisions is high and continuing to rise.

These factors could result in unusually cautious management commentary and/or disappointing quarter-to-date sales disclosures during the upcoming conference call season. The Raymond James analysts would not be surprised to see consensus sales and EPS forecasts lowered for both the first quarter and the rest of 2013 for the majority of their universe, as a result of conference call commentary over the next four to six weeks. So as a result, they are taking a generally cautious investment stance. The Buy and Outperform ratings are generally characterized by attractive valuations and strong underlying business models….”

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DICK bove Sees a 30% Gain in Bank Stocks

“When well-known analysts make a major price call, investors and Wall St. usually listen. Outspoken bank analyst Richard Bove has done just that. The former Ladenburg Thalman and Rochdale securities analyst recently landed at Rafferty Capital Markets and has made some bold predictions in a fresh research report. If he is correct, owning large money center banks and other financial stocks may be a winning investment in 2013….”

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