Wednesday Stocks to Watch

The market is trading slightly higher after the FED kept its lending rate at 5.25% for the 6th straight meeting. Looks like inflation is still not out of the wood yet even though we saw some down turn in the housing market along with the subprime markets.
Keep your eyes on how the market reacts to the news with volumes. If the timing is right, just jump it. Here is the movers and shakers from MarketWatch for you to use as a watch list:

Advancers

Adobe Systems Inc (ADBE) said first-quarter profit rose 37%, helped by non-operating income and a lower tax bill, while sales slipped from a year ago as customers delayed purchases ahead of an important product launch. See full story.

AirTran Holdings (AAI) was upgraded to overweight from neutral by J.P. Morgan after the stock has "taken a beating." The broker said "second-half 2007 competitive supply trends appear benign, and AirTran's multi-month hiatus from aircraft deliveries and city-adds should lead to positive revenue per available seat miles and above consensus earnings."

American Axle Manufacturing (AXL) was upgraded to buy from neutral at UBS.

American Superconductor Corp. (AMSC) said it's received an order worth roughly $8 million for an additional 150 1.5 megawatt wind turbine electrical systems from China's Sinovel Wind Corp. Ltd.

Automatic Data Processing (ADP) said it now sees growth of 20% to 23% in earnings per share from continuing operations in fiscal 2007. It sees revenue growth of 12% to 13% for the year. This revised view reflects the anticipated completion of the spin-off of its Brokerage Services Group on March 30. The company also provided an outlook for its Broadridge operations, saying it expects revenue growth of 7% to 9% for the fiscal year ending June 30 from its fiscal 2006 total of $1.93 billion. ADP said Broadridge sees operating income growth of 9% to 14% for fiscal 2007 from its total of $303 million for fiscal 2006. This view excludes expenses from the spin-off, interest expense on new debt and public company expenses.

Avalon Pharmaceuticals' (AVRX) shares rose in midday action on Wednesday. The Germantown, Md., cancer therapeutics developer is scheduled to release its results for the fourth quarter and fiscal 2006 after the closing bell.

Chaparral Steel Co. reported third-quarter net earnings of $62.5 million, or $1.29 a share, up 27% from $49.2 million, or $1.03 a share, during the year-ago period. The Midlothian, Texas-based producer of structural steel beams and supplier of steel bar products posted net revenue of $420.2 million vs. $374.6 million. Additionally, Chaparral said that based on current market conditions, it expects the fourth-quarter earnings of $1.35 a share. The company said it believes the end user demand for its products will remain strong.

Clorox (CLX) was upgraded to overweight from neutral by J.P. Morgan, which said the company will benefit from declining resin prices. "We think Clorox is also best positioned in case of a global economic slowdown, through low international sales, and high materials exposure," the broker said.

Ediets.com (DIET) posted fourth-quarter earnings from continuing operations of $100,000, or break even on a per share basis, with revenue of $9.5 million. The company also said it expects to launch its DeliciouslyYours weight loss meal delivery offering in the second quarter.

Fortress Investment Group (FIG) said late Tuesday its board has declared a partial first-quarter dividend of 12.25 cents a share, reflecting its initial public offering pricing date of Feb. 8. The company said its annualized dividend will be 85 cents a share, up 25% from its pre-IPO annualized payout of 68 cents. A number of firms also started coverage of the company, including Lehman Bros. with an overweight rating and Goldman Sachs with a buy rating.

Fremont General Corp. (FMT) said it'll book a $140 million pre-tax loss in the sale of $4 billion of its sub-prime residential real estate loan portfolio. The company said it's received a first installment of $950 million in the deal, with other sales agreements expected over the next several weeks. Fremont did not name the buyer. "The company will sell the loans at a discount, reflecting current conditions in the sub-prime mortgage market," the Santa Monica, Calif., company said.

GSI Commerce (GSIC) was upgraded to buy from neutral at Goldman Sachs.

ICF International Inc. swung to a fourth-quarter profit of $9.21 million, or 65 cents a share, from a loss of $1.03 million, or 11 cents a share, a year earlier. The Fairfax, Va., provider of consulting and technology services said revenue more than doubled to $113.9 million from $51.8 million a year ago. On average, analysts polled by Thomson Financial predicted fourth-quarter revenue of $100 million. ICF International expects first-quarter revenue of $125 million to $135 million and 2007 revenue of $480 million to $520 million. Analysts predict first-quarter and 2007 revenue of $96.9 million and $399 million, respectively.

IMAX Corp. (IMAX) signed a deal to install a theatre in the Daqing Science and Technology Museum in China.

Medivation Inc. (MDVN) was initiated with an outperform rating at RBC Capital Markets. The firm set a price target of $24.

Microsemi Corp. (MSCC) was upgraded to outperform from market perform at Piper Jaffray. The firm lifted its price target to $25 from $20, citing improved business trends.

Morgan Stanley (MS), the last of four big Wall Street banks to report earnings for their first quarter ending in February, said Wednesday that profit in the period rose 70%, to $2.67 billion, or $2.51 a share, compared to $1.57 billion, or $1.48 a share a year ago. Revenue in the quarter rose to $11 billion, from $8.55 billion a year ago. The company said favorable mortgage positions helped trading results in the quarter. See full story.

Nvidia (NVDA) was upgraded to buy from neutral at Goldman Sachs. The firm cited valuation and set a six-month price target of $33.

OfficeMax (OMX) was upgraded to buy at Goldman Sachs. The firm said it believes the office supply retailer is still a "vibrant turnaround story, with significant margin opportunity relative to its competitors." Analyst Matthew Fassler said the company's operating margins are still well below its competition, citing inferior sales productivity, weak store concentration compared to its rivals, and a contract business more heavily weighted toward lower-margin large customers. "We expect operating momentum from tangible initiatives to continue to drive margins higher," Fassler wrote in a note to clients.

OptionsXpress Holdings (OXPS) named David Fisher, previously its chief financial officer, to the president position. Adam DeWitt was tabbed to succeed Fisher as CFO. The company also said Ned Bennett, one of its founders, will become executive vice-chairman.

Oracle reported fiscal third-quarter profit rose 35%, helped by a surge in sales of the business-software applications Chief Executive Larry Ellison has acquired during a three-year acquisition spree. See full story.

Stein Mart Inc. (SMRT) said fourth-quarter earnings rose to $21.07 million from $21.06 million a year earlier, while earnings-per-share remained flat at 48 cents. The Jacksonville, Fla., fashion-merchandise retailer said sales rose 7.9% to $461 million from $427.4 million in the year-ago period. Stein Mart said the latest period included an extra week, which added $19.7 million in sales and about 4 cents to earnings per share. Same-store sales, or sales at stores open at least a year, rose 0.9% for the latest quarter. Analysts polled by Thomson Financial expected, on average, fourth-quarter earnings of 41 cents a share.

Targa Resources Partners LP (NGLS) was initiated with a buy rating and a $29 price target at A.G. Edwards.

Telestone Technologies Corp. (TSTC) shares surged after the Beijing-based provider of wireless communications equipment reported fourth-quarter net income rose 12.2% to $1.6 million, or 19 cents a share, from $1.4 million, 17 cents a share, in the year-ago period. Revenue rose 35% to $7.4 million from $5.5 million in the prior-year quarter.

Tiffany & Co. (TIF) was upgraded to buy from neutral at Banc of America Securities. The firm lifted its price target to $52 from $44.

Ultralife Batteries (ULBI) said it's received an order worth about $1.6 million for its BA-5390 battery from the Defense Department.

Velocity Express Corp. (VEXP) said it's recently signed a multi-year contract renewal, representing more than $13 million in annual revenue, with its largest financial services customer. Westport, Conn.-based Velocity Express, which provides regional delivery services, did not name the customer. As part of the contract, Velocity Express said it will continue to manage primary transportation needs for the customer in markets in the south, northeast and west coast states.

WSI Industries (WSCI) shares jumped after the Minneapolis-based maker of parts for the avionics and defense industries reported fiscal second-quarter net earnings of $155,000, or 6 cents a share, up from $69,000, or 3 cents a share, in the year-ago period. Revenue rose to $4.44 million from $3.57 million. The company said it expects continued top-line growth in the second half of fiscal 2007.

Decliners

AAR Corp. (AIR) reported net income of $15.3 million, or 36 cents a share, for the third quarter ended Feb. 28, up from the prior year's $9.1 million, or 24 cents. The Wood Dale, Ill.-based supplier of equipment used in aviation and aerospace applications tallied quarterly sales of $271 million, including $16.5 million from the sale of two aircraft at book value. AAR's year-earlier revenue amounted to $223.4 million. Earnings from continuing operations were 37 cents for the latest quarter, the company said. Analysts were looking a profit of 37 cents a share, according to estimates compiled by Thomson Financial. Operating income improved to $25.5 million, up from $18 million in the year-ago third quarter.

Shares of Agilysys Inc. (AGYS) slumped following a downgrade at Raymond James to market perform from outperform, due primarily to concerns over valuation. Analyst Brian Alexander said if the information technology services company's management executes its 3-year plan, the stock could exceed $30. "Discounting this back to the present, however, results in a current price of $22.74," Alexander said in a research note. So at Tuesday's closing price of $22.66, Alexander said the stock appears "fully valued."

Alcoa (AA) was downgraded at Prudential to neutral weight from overweight, citing concerns over a doubling in output growth out of China and higher costs estimates. Analyst John Tumazos cut his price target for the aluminum producer's stock to $38 from $41, his 2007 earnings estimate to $3.38 a share from $3.72 and his 2008 estimate to $2.73 a share from $2.88. His unit cost assumption increased by 2%. Alcoa's stock, a component of the Dow industrials, was down 1.1% at $33.68 ahead of the open. Alcoa's downgrade comes as Tumazos lowered his rating on the aluminum industry to unfavorable from favorable. He also downgraded Alcan (AL) to underweight from overweight, and cut his price target to $48 from $60.

Buffalo Wild Wings (BWLD) was downgraded to hold from buy at Jefferies & Co.

Charming Shoppes Inc. (CHRS) said fiscal fourth-quarter net income rose to $24.9 million, or 19 cents a share, from $19.2 million, or 15 cents a share, in the year-ago period. Net sales rose to $874 million from about $800 million. Analysts, on average, expected it to earn 19 cents a share on revenue of $863 million, according to Thomson Financial. Sales at stores open at least one year fell 1%. For the year, Charming Shoppes expects to earn 85 cents to 89 cents a share, assuming total sales in a range of $3.25 to $3.3 billion and low single-digit percentage increases in consolidated same-store sales. For the first quarter the company, which operates Lane Bryant, Catherines and Fashion Bug stores, forecast earnings per share in the range of 19 cents to 21 cents with total sales in a range of $780 to $790 million, and flat consolidated same-store sales. Analysts polled by Thomson Financial expect it to earn 28 cents a share on revenue of $786 million for the first quarter, and post a profit of 92 cents a share on revenue of $3.25 billion for the year, on average.

Cintas Corp.'s fiscal third-quarter net income rose slightly to $76.7 million, or a 48 cents share, from $76.6 million, or 45 cents a share, a year earlier. The Cincinnati provider specialized services to businesses said revenue for the quarter ended Feb. 28 rose 8.2% to $905.4 million from $836.4 million a year ago. Cintas cut its 2007 earnings and revenue forecast to ranges of $2.03 to $2.08 a share and $3.675 billion to $3.725 billion, respectively.

Cost Plus (CPWM) has rescheduled the release of its results for the fourth quarter and fiscal 2006 to April 12 from March 22. The Oakland, Calif., off-price retailer said it needs additional time to finish its statements and allow the independent auditor to complete their work.

Darden Restaurants Inc. reported a slight bump in fiscal third-quarter net profit late Tuesday with the help of a tax break -- and the company stuck to its full-year earnings and sales growth target. See full story.

Diversa Corp. (DVSA) said it plans to sell about $75 million worth of convertible subordinated notes due 2027 in a private placement. The deal includes an over-allotment option for the sale of an additional $11.25 million in notes.

FedEx Corp. (FDX) said fiscal third-quarter earnings fell 2% to $420 million, or $1.35 a share, from $428 million, or $1.38 a share, a year earlier, hurt by a "slowing economic environment", lower fuel surcharges and 6 cents a share due to winter storms. The company said the latest period was helped by 8 cents a share from a reduction in its effective tax rate. The Memphis-based package-delivery company said revenue for the period ended Feb. 28 rose 7% to $8.59 billion from $8 billion in the year-ago period. Analysts polled by Thomson Financial expected, on average, third-quarter earnings of $1.33 a share on revenue of $8.7 billion. See full story.

FSI International (FSII) said its second-quarter loss widened to $4.29 million, or 14 cents a share, from $3.72 million, or 12 cents a share, a year earlier, as the company recorded a $3.6 million impairment charge. The Minneapolis microelectronics capital equipment manufacturer's revenue for the quarter ended Feb. 24 grew 50% to $33.4 million from $22.3 million in the year-ago period. On average, analysts expected revenue of $33.8 million, according to a poll by Thomson Financial. For the third quarter, the company expects revenue of $24 million to $27 million, compared with Wall Street's estimate of $36.4 million. FSI expects a severance charge of $450,000 in the third quarter after the company last week cut headcount by 11% and made other cutbacks.

Gateway Inc. said it isn't involved in discussions to be acquired by Taiwanese personal-computer giant Acer Inc. A Gateway spokesman said that while the No. 3 U.S. PC maker doesn't normally comment on rumors, it isn't in any discussions with Acer, which has been trying to make more inroads in the U.S. computer market.

Hancock Fabrics (HKF) said it has filed a voluntary petition for Chapter 11 relief in the U.S. Bankruptcy Court for the District of Delaware. The company said it has negotiated a consensual $105 million debtor-in-possession financing arrangement with Wachovia Bank, N.A., and is in the final stages of negotiating an additional loan of up to $17.5 million with another lender.

Lindsay Corp. (LNN) posted fiscal second-quarter earnings of $2.5 million, or 21 cents a share, on revenue of $63.7 million. The Omaha, Neb., maker of irrigation systems said demand for its equipment has developed slightly slower than expected with higher corn and grain prices and the adverse impact of wet winter weather.

McClatchy Co. reported that total revenue in February fell 5.1% compared with the year-ago pro forma figure. Pro forma revenue includes the addition of newspapers purchased in the Knight Ridder acquisition, and excludes the Minneapolis Star Tribune newspaper, the Sacramento, Calif.-based newspaper company said. Consolidated advertising revenue for the month decreased 5.2%, McClatchy said.

Media General (MEG) expects to post a first-quarter net loss of 26 cents to 30 cents a share. A survey of three analysts by Thomson First Call produced a consensus estimate of profit of 20 cents for the quarter. Market conditions were "difficult" in January and February, MEG said, with comparable total revenue for February down 2.9%. In February, publishing revenue declined 4.2%; broadcast revenues rose 27% including new stations and fell 2.7% on a comparable basis, and interactive-media revenue rose 29%.

New York Times Co. said February revenue from continuing operations fell 3.6% from the same month last year, while advertising revenue from continuing operations dropped 6%. The company said February ad revenue fell 7.5% at the New York Times Media Group, dropped 4% at the New England Media Group, and fell 8.1% at the Regional Media Group.

ProQuest (PQE) shares dropped after the NYSE said it's delisting the company's stock. "The decision was reached in view of the fact that the company is a late filer," the exchange said. "Also, the company was under review by NYSE Regulation in light of the delay in filing with the Securities and Exchange Commission its December 31, 2005 Form 10-K and certain of its 2006 Form 10-Q filings." The company will trade on the Pink Sheets, the NYSE said.

U.S. Auto Parts Network (PRTS) shares plunged after the Carson, Calif.-based company reported a fourth-quarter net loss of $20,000, or breakeven per share, compared with net income of $2.06 million, or 16 cents a share, in the year-ago period. Revenue for the fourth quarter ended Dec. 31, 2006, more than doubled, rising to $36.8 million from $15.7 million in the prior-year period. The company forecast first-quarter results in a range of a 2 cent-loss to breakeven on revenue of $39 million to $41 million, and forecast 2007 earnings of 5 cents to 17 cents on revenue of $170 million to $185 million.

ValueVision Media Inc.'s fourth-quarter net income rose 2.6% to $3.52 million, or 8 cents a share, from $3.43 million, or 8 cents a share, a year earlier, as revenue rose 3.5%. The Minneapolis direct marketer's revenue for the quarter ended Feb. 3 grew to $216.7 million from $209.4 million in the year-ago period.