Analyst Upgrades

• Wells Fargo upgraded Accenture (ACN) to outperform from market perform following the company's Q4 results, citing improved tone and increased visibility. The firm raised its target range for shares to $51 to $53 from $41 to $44.
• Macquarie upgraded FirstMerit (FMER) to outperform from neutral and has a $21 price target on the stock. The firm cites FirstMerit's strong fundamentals and competitive advantage for the upgrade.
• Macquarie transferred coverage on Marshall & Ilsley (MI) with a neutral from an underperform based on improved risk/reward.
• Eaton (ETN) was upgraded to overweight from neutral at JPMorgan.
• HSBC (HBC) was upgraded to conviction buy from buy at Goldman.
• Walgreen (WAG) was upgraded to overweight from equal weight at Morgan Stanley.

Caterpillar, Inc. (CAT) is hosting an analyst meeting in New York City on August 19. CAT August put option implied volatility is at 36, September is at 37, November is at 39; verses its 26-week average of 34 according to Track Data, suggesting larger price movement.

AT&T, Inc. (T) September and October option implied volatility is at 21, January is at 24; above its 26-week average of 21, according to Track Data, suggesting larger January price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Earnings season is fully underway. Despite top-down headlines calling for a Third Depression and dubbing Fed Chairman Ben Bernanke as "Davey Crockett at the Alamo," the fundamentals still reveal a developing recovery story line.

Just today, 3M, (MMM) AT&T (T), Caterpillar (CAT), Eli Lilly (LLY), Jet Blue (JBLU) and UPS (UPS ) beat their earnings estimates to the upside and provide upbeat forecasts.

U.S. stocks surged Thursday morning following yet another strong batch of earnings, and despite several weak economic indicators. The Dow Jones industrial average rose about 200 points, or 2%, while the Nasdaq composite jumped 2.3% and the S&P 500 soared 2.1% by noon trading. And stocks were even higher earlier.

Earnings results continued to impress Wall Street. This morning, such heavy weights as Caterpillar (CAT), 3M (MMM), UPS (UPS) and AT&T (T) all topped earnings estimates and raised their outlooks. Shares of all four were generally higher in morning trade. Meanwhile, General Motors said it is acquiring auto financier AmeriCredit (ACF) for $3.5 billion.

Someone has to build the foundation for an economic recovery, and Caterpillar (CAT) has all the right tools to do so.

As the economy continues to recover and governments and corporations begin to rebuild, investment in heavy machinery is picking up.

On Friday, Caterpillar reported that the company's machine sales rose worldwide for the first time since late 2008, growing 11% from the same year-ago period ending in May. Asian sales led the way with an increase of 38%, but North America wasn't too far behind with gains of 15% over last year. Unfortunately, sales in Europe declined by 8%.

Analyst Upgrades

• Soleil upgraded Starwood Hotels (HOT) to buy from hold, citing accelerating RevPAR comps and valuation. The firm upped its target for shares to $57 from $55.
• TD Newcrest upgraded Ivanhoe Mines (IVN) to speculative buy from hold based on valuation.
• BMO Capital upgraded Power Integrations (POWI) and ON Semiconductor (ONNN) to outperform from market perform based on valuation. The firm has a $45 target on Power Integrations and a $9 target on ON Semiconductor.
• Priceline.com (PCLN) was upgraded to buy from neutral at Goldman.
• Reliance Steel (RS) was upgraded to buy from neutral at UBS.
• AXA (AXA) was upgraded to add from neutral at WestLB.
  

Caterpillar (CAT - option chain) shares are rising today after the company announced after yesterday's closing bell that its Board has elected Doug Oberhelman Chief Executive Officer and a member of Board of Directors, effective July 1. Oberhelman is an internal hire who spent the last six months leading a team updating the company's Vision 2020 strategy. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CAT.

CAT opened this morning at $58.31. So far today the stock has hit a low of $58.00 and a high of $59.90. As of 11:55, CAT is trading at $59.22 up $2.41 (4.2%). The chart for CAT looks bullish and S&P gives CAT a positive 4 STARS (out of 5) buy ranking.

Some amazing information has come to light regarding AT&T (ATT), Verizon (VZ), Caterpillar (CAT) and Deere & Co. (DE). It would seem that these companies (among a host of others, I'm sure) have initially determined that dropping health coverage for employees could significantly benefit their bottom lines, and thus benefit investors.

No Surprise Here

As reported by CNNMoney.com, when the health reform bill finally received the president's signature, many large companies began to assess the potential costs of the legislation. At the same time, much was made of the large write-downs that companies took in reaction to changes brought on by the new law.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Aflac Inc. (AFL) higher Q1 earnings were better than analysts expected, due in part to a stronger yen.
• Automatic Data Processing Inc. (ADP) Q3 EPS were the same as a year ago and revenue inched higher.
• BlackRock Inc. (BLK) higher Q1 earnings fell short of analysts' expectations due to acquisition-related charges.
• Broadcom Corp. (BRCM) posted record revenue in Q1 and swung to a profit from a year-ago loss.
• Burger King Holdings Inc. (BKC) topped Wall Street's Q3 earnings estimate, but same-store sales fell.

Caterpillar, Inc. (CAT) is trading higher this afternoon. As I write this, shares are up over $3, or 4.6%. Not bad at all for a company like this one. Volume is quite convincing, too.

The heavy-equipment maker is very close to its 52-week high of $72.83, a level that was hit today. The one-year chart is encouraging to both investors and traders alike. The stock has pulled far away from the 52-week low, and judging by the current price action I'm seeing, it seems that the uptrend could certainly continue.

The markets might have been pulled down as shares of Citigroup, Inc. (C) the most widely traded stock in the US fell over 5% to $4.62. The drop was a problem for Citi which is trying to get its shares over $5. Many institutions cannot buy shares at level below that.

Other financial stocks drifted down modestly in concert with Citi. Goldman Sachs (GS), under increasing pressure from an SEC investigation, dropped 5% to $151. Wall St. is betting against a good outcome in the legal battle.

Today's closing bell numbers:

Dow 11,205.03 +0.75 (0.01%)
Nasdaq 2,522.95 -7.20 (-0.28%)
S&P 500 1,212.05 -5.23 (-0.43%)

U.S. stock futures advanced Monday morning, as investors seemingly ready to continue to drive stocks higher after reaching a 19-month high Friday. Strong earnings season, made stronger with this morning's Caterpillar report have been a key driver in the past couple of weeks. In addition, as the Greece bailout moves forward and economic indications continue to point to recovery, investors gain confidence.

There are no major economic reports due Monday, but the week is full of key readings such as GDP, consumer confidence and jobless claims. Also, the Federal Reserve Open Market Committee is meeting to discuss monetary policy, including interest rates. The two-day meeting will conclude on Wednesday.

The world's largest construction and agricultural equipment maker, Caterpillar Inc. (CAT), is scheduled to discuss its first-quarter financial results in a conference call Monday, April 26, at 11:00 AM (ET). You can catch the live webcast of the call (later archived) at the company's website.

During the three months that ended in March, Caterpillar announced that it would join a clean-coal alliance, launched new operations in Australia and considered moving jobs from Japan to the U.S. But analysts surveyed by Thomson Reuters expect the Peoria-based company to report first-quarter earnings of $0.39 per share, the same as in the year-ago period. And revenue is expected to have fallen 4.2% to $8.8 billion.

One has to like the stock trend and revenue outlook for Caterpillar (CAT), first discussed here on April 13, 2009 at a price of $33.02.

Look for Caterpillar's 2010 revenue to jump 15-20% on a strong rebound in construction and agriculture equipment, as the global economic expansion strengthens. Caterpillar's solid cost controls add to the positive mix. The sole laggard: the U.S. housing sector, whose rebound will trail other business areas.

Analyst Upgrades

• Jefferies upgraded St. Jude (STJ) to buy from hold and raised its target to $49 from $39. The firm cites valuation and the positive impact from the Boston Scientific (BSX) ICD recall for the upgrade. Shares were also upgraded to neutral from sell at Goldman, as the firm sees upside for shares into Q1 results.
• RBC Capital upgraded EMC Corp. (EMC) to outperform from sector perform and raised its target to $22 from $21. The firm upgraded shares based on valuation and believes the company can meet or modestly beat March quarter expectations.
• Auriga upgraded MetroPCS (PCS) to buy from hold as it believes customer migration away from postpaid to prepaid may be accelerating. The firm raised its target for shares to $9 from $7.
• Caterpillar (CAT) was raised to outperform from neutral at Baird.
• Best Buy (BBY) was upgraded to market perform from underperform at FBR Capital.
• Expedia (EXPE) was upgraded to overweight from neutral at Piper Jaffray.