Benzinga's Top Upgrades with Color for May 21, 2012

Listed below are today's Top Upgrades at Benzinga:

Guggenheim commented in the report, "Our upgrade of Nabors Industries to Buy from Neutral (target $22) is first and foremost a valuation call, supported by a detailed sum of the parts NAV and DCF analysis. We believe the stock will be rerated over the next 12 months as improving U.S. gas market fundamentals and expanding international margins prompt investors to consider how oversold the stock has become relative to the company's underlying asset value and strong cash flow. With a fullcycle risk-reward of roughly 1:5, we believe the Buy rating is now warranted."

Brean Murray Carret comments, "In our opinion, the fundamentals and outlook of the company and the met coal market did not materially change over recent weeks. What did change is the stock price, so that we now believe there is more upside to owning the shares."

Brean Murray Carret notes, "We are raising our rating for AEO to Buy (from Hold), instituting a price target of $23 and raising our FY13 EPS projection to $1.25 (from $1.10) and FY14 EPS to $1.42 (from $1.29) after American Eagle, in front of the 1Q earnings release on Wednesday before the open, announced the closure of the money draining 77kids operation and the departure of their CFO. We had been impressed with new CEO Robert Hanson's plan for the company to maximize returns; we are now impressed enough with his initial actions to aggressively raise estimates, our rating and institute a price target with implied returns of 25%."

Sterne Agee comments, "We have upgraded GPI to Buy from Neutral to reflect current valuation levels, higher earnings assumptions and the continuation of a modest and steady recovery in U.S. vehicle demand. We have increased our price target to $65 per share from $63 per share to reflect our higher earnings assumptions but continue to use the low end of the targeted valuation range owing to industry uncertainties. In addition, GPI has been consistently returning cash to shareholders in the form of dividends and share repurchase and enhancing growth through acquisitions."

Guggenheim notes, "FHN can continue to buy back excess capital and improve efficiencies in order to enchance profitability over the next two years. Neither of these initiatives is tied to economic growth. We expect FHN's tangible book value to improve to close to $9.50 by yearend 2013, so if FHN can trade at a 5% premium, then we think the stock has 18% upside potential."

Citigroup said, "We are upgrading SWY to Buy, from Neutral, based on: 1) topline growth driven by Just For You (J4U), a return to eating at home, and pharmacy share gains; 2) gross margin expansion from moderating inflation, falling gas prices, and reduced shrink; and 3) continued cost discipline. We believe valuation is attractive as the stock is trading at a 7.9x multiple on our 2013 EPS estimate of 2.34, vs. our 11x target and SWY's 10-year median of 12.1x."