Underperform - Price 25.99 on June 2 by Jefferies & Co. AXP announced a $500 million follow-on equity issuance…to repay low-cost, high-stigma [Troubled Asset Relief Program] capital.…We expect AXP to use a combination of this capital, funds already on the balance sheet, and lower levels of marketing and investment to accomplish its goal of repaying $3.4 billion in outstanding TARP preferred. [The]…issuance doesn't change our outlook…[We find] the current forward price/earnings ratio of 20 times too rich, considering regulatory pressures and dramatic declines in credit-card-spending volumes. Target: 18. Market cap: $28.8 billion.

Buy - Price 13.37 on June 2 by Pritchard Capital Oil-service firm MTZ announced [a] public offering of senior convertible notes and common stock offering for acquisition-related selling shareholders…[with] pricing of $100 million [and] an additional $15 million…senior-convertible notes due '14. The notes will pay 4% interest rate and come with a conversion price of approximately $15.76 a share…The offering's proceeds will be used to redeem at par the existing $55 million convertible notes, for working capital, possible acquisitions of assets and general corporate purposes.…[L]owvaluations might [create opportunities] for MTZ to make an acquisition. Based on a P/E of 15 times and projected 2009 [earnings per share] of $1.10, we maintain a Buy rating and 16 target. Market cap: $1 billion.

Buy - Price 39.91 on June 2 by Sterne, Agee & Leach Six-to-12-month target: 52. Navistar has emerged successfully from the accounting issues that plagued it starting in 2004.…Navistar operates through four distinct segments: trucks (about 70% of revenue, about 65% of operating income), engines (about 15% to 18% of revenue), parts (about 8% to 10% of revenue [from] 11 regional distribution centers, and about 966 dealers), and financial services. Navistar Financial Services (3% to 4% of revenue) provides wholesale and retail financing for Navistar products as well as products of other manufacturers. Embedded within the truck segment is the company's defense-related effort, which accounts for about $2 billion in sustainable sales on an ongoing basis. In 2006, Navistar entered the military business by offering commercial off-the-shelf solutions instead of bespoke vehicles. Navistar's strategy allowed for low cost and flexible manufacturing of M-RAPs [Mine-Resistant Ambush-Protected vehicles], which resulted in peak sales to the military of about $4 billion in FY08. The company's unique approach is making it a formidable competitor on future bids, such as for the M-RAP-ATV… The defense business is now critical to Navistar. Market cap: $2.7 billion.

Accumulate - Price 49.82 on June 2 by the Buckingham Group Sigma-Aldrich is a leading supplier of biological and organic chemicals to [global] research labs, manufacturing about half of its 100,000 chemicals. Growth drivers include [research-and-development] innovations, favorable price increases, marketing initiatives, and acquisitions. Risks include changes in research funding, uncertainties in government health-care reform, and fluctuations in interest rates and [foreign-currency exchange] rates. The stock is up…almost 60% from March low. We are raising our target from 52 to 58, which reflects 18.7 times forward EPS. Unlike some stocks which have recovered to the high end of their valuation range, the high end of SIAL's forward P/E range is near 25 times, and the stock is still about 20% below its 2008 high.…Most chemical companies with f/x exposure are also [subject] to the offsetting effect of oil prices. Oil prices have a relatively[small] impact on SIAL's near-50% gross margins. Research-and-drug consumables are among the more stable, predictable growth areas in chemicals. SIAL doesn't sell big-ticket research equipment.…Individual testing and the production of custom medicines both play to SIAL's products, which are used in the analysis of genes, and in small-volume (i.e., custom) production (SIAL produces 46,000 products). Market cap: $6.1 billion.

Hold - Price 36.82 on June 2 by Roth Capital Partners Target: 50. According to China infant-formula trade statistics, major foreign producers, particularly Danone Group and Mead Johnson, appeared to have reversed the previous downward trend and recovered some lost ground at the cost of domestic producers in the month of April. Market share of most domestic brands declined in April. ADY held up well relative to its domestic peers such as Yili, Beingmate, and Synutra, with 6.5% market share, down 0.4% from March. In our opinion, the favorable April results for foreign brands may reflect their recently heightened promotional efforts. Market cap: $635 million.