We have another week that has passed by and there were many stand-out research calls that took place throughout the last week.  Our top analyst calls, some of which are dubious honors and some of which were full of great insight, were seen in Capital One Financial Corp. (NYSE: COF), Ctrip.com International Ltd. (NASDAQ: CTRP), National Bank of Greece SA (NYSE: NBG), Pandora Media, Inc. (NYSE: P), Research in Motion Ltd. (NASDAQ: RIMM), Sears Holding Corp. (NASDAQ: SHLD), and in SurModics Inc. (NASDAQ: SRDX).  We also had two broader calls which are very much worth noting in shares of Las Vegas Sands Corporation (NYSE: LVS), Melco Crown Entertainment Ltd. (NASDAQ: MPEL), Home Depot Inc. (NYSE: HD), Lowe’s Companies Inc. (NYSE: LOW), Belo Corp. (NYSE: BLC), and Gannett Co., Inc. (NYSE: GCI).

We have gone in and described each call, made other references, and provided color on each if applicable.  Again, having the “Top Research Call of the Week” status is not always a compliment nor is it always just bullish.

Capital One Financial Corp. (NYSE: COF) is one that scored with its winning acquisition of ING Direct.  The $9 billion price tag seems high, but now “What’s in your wallet?” went from the #8 bank to the #5 bank by deposits in America.  Our take is that this may set off a wave of smaller to mid-sized financial deals among those firms which are not burdened by Treasury oversight.  After the deal was confirmed, the stock was raised to “Buy” at SunTrust and a lesser upgrade came from S&P Equity Research to “Hold” from “Sell.”

Ctrip.com International Ltd. (NASDAQ: CTRP) was a bit odd because shares were initially up after the open with the broader market.  Still, Goldman Sachs cut its rating to SELL on the travel services outfit that is in China.  A competing call from ThinkEquity maintained an “Outperform” rating but it was the Sell rating that ruled the roost on Friday as shares closed down 0.7% at $39.95 against a 52-week trading range of $31.35 to $53.16.

National Bank of Greece SA (NYSE: NBG) was an example of a research call that was very late to the game as it had been under review for months and just now gotten to.  S&P decided in its infinite wisdom just now that the Greek banks might have some collateral damage with the Greek economy under debt restructuring fears and in the age of austerity.  The irony is that the ADR of NBG closed out the week higher than before the credit rating cut by S&P was issued.

Pandora Media, Inc. (NYSE: P) was a strange IPO and we called it a value hat trick game ahead of the open.  Our concern was not unwarranted.  After raising about twice as much as originally expected, Pandora was a classic “Gap & Crap” trade.  The underwriters cannot initiate coverage for 30 days, but a firm that was not in the underwriting called BTIG was able to cover it.  BTIG issued a SELL rating with a $5.50 target at BTIG.  There is a flip side call here… Maxim Group issued a “Buy” rating with a $23 price target.  Is there a paradox when a company called Pandora tanks as the Greeks riot?  Pandora is an example of the sins of the underwriting world.

Research in Motion Ltd. (NASDAQ: RIMM) was the biggest telegraphed warning that there ever was.  The only question was whether the warnings would by bad or beyond atrocious and whether or not the negative sentiment was so awful.  There were three awful research calls this week, one offered no value at all and one offered wealth destruction.  The “No value added” call came from Citigroup, where it cut RIM to “Sell” from “hold” and S&P Equity Research also got torched by cutting it to “hold” from “Buy.”  Both calls were after the earnings.  The only saving grace was that at least the Citi analyst had removed his buy rating on RIM a week earlier.  The worst call of the week though was as unlucky as it comes after reports were out that Avian Securities raised the rating to “Positive” from “neutral” with a $45 target shortly before the earnings report.  That analyst was actually quite negative in the research call and it was based upon the belief that all the bad news (including losing the U.S. market permanently) was priced in.  It wasn’t.

Sears Holding Corp. (NASDAQ: SHLD) is one that the bulls just cannot get a win in.  Many feel that the value could be or should be DOUBLE what the stock trades at now, but it turns out that Eddie Lampert is just not a retail guru and unlocking value in the post-Recession period has been challenging while its store trends lag.  Zacks gave no mercy this week by maintaining an “Underperform” and went on to call it the “Bear of the Day” on Friday.

SurModics Inc. (NASDAQ: SRDX) had an atrocious week falling from $13.30 before the news to $11.01 before closing at $11.55 after the news that Johnson & Johnson (NYSE: JNJ) decided to stop manufacturing Cypher drug-eluting coronary stents by the end of this year.  SurModics makes the drug-coated stent molecules. We think that this research note may underestimate the damage, but it was a research call that may have helped stabilize the stock.  Zacks said to focus on issues like its work-force reduction, changes in management and its operating segments rather than on the business lost by this event.  Zacks maintained a “Outperform” rating saying that the current price represents an attractive entry point for long-term investors.

CASINOS…. Las Vegas Sands Corporation (NYSE: LVS) joined in the rating upgrade from ratings agencies for its corporate credit ratings, not the equity.  This was after the same sort of call came from S&P on Wynn Resorts Ltd. (NASDAQ: WYNN) the week before.  S&P is close to “investment grade” on these companies now.  The common thread is the bump up from Macau, and that brings us to call out Melco Crown Entertainment Ltd. (NASDAQ: MPEL) as the Macau pure-play.  Melco Crown saw two target upgrades this week to $14.50 at Morgan Stanley and to $16.00 at Credit Suisse.  This week followed waves of target price upgrades in the weeks before on Melco Crown.

HOME IMPROVEMENT DUO… Home Depot Inc. (NYSE: HD) and Lowe’s Companies Inc. (NYSE: LOW) were given two calls that we have a hard time fathoming in the current climate, but they were also contrarian enough that they stood out very keenly earlier in the week.  UBS initiated coverage on both hardware and home improvement giants with “BUY” ratings and gave price targets of $41.00 for Home Depot and $28.00 for Lowe’s.  On the other hand, Goldman Sachs lowered the targets to $41.00 from $43.00 on Home Depot and to $28.00 from $29.00 on Lowe’s.

MEDIA STOCKS ON ELECTION... Belo Corp. (NYSE: BLC) and Gannett Co., Inc. (NYSE: GCI) were both among the winners of a call which we considered highly insightful.  This was some great stealth coverage that flew undetected on Wall Street’s radar.  Gabelli & Co. covered these two and many other media companies in a larger screen of media and TV companies which will win from the election cycle coming up as corporations are now free to spend endless cash after the Supreme Court decided that was “free speech.”  These value stocks trade at cheap multiples and Gabelli specializes in potential M&A targets and finding love where others cannot. It turns out that the consensus price targets from other analysts are generally much higher than these current share prices too.

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JON C. OGG

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