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By Larry Gellar

Today, we’ll be taking a look at the latest rating upgrades from Wall Street analysts. While Boeing (BA) and International Paper (IP) are receiving modest praise, JC Penney (JCP) and MetLife (MET) are putting together plans to fundamentally change their business. Meanwhile, Pandora (P) remains an interesting speculative play. Let’s see what’s been happening with these 5 stocks:

Deutsche Bank upgraded JC Penney from Sell to Hold and applauded the company’s restructuring efforts. In fact, those restructuring efforts are part of the reason that the stock has jumped nearly 50% from its August lows. One major change that JC Penney has made is the hiring of Ron Johnson, who was the CEO of Apple’s (AAPL) retail stores. While Johnson is expected to have a huge impact on JC Penney, JC Penney has already stated that investors shouldn’t expect any miracles in the just-finished 4th quarter of 2011. In many ways, JC Penney is getting all of its bad news out of the way now while it’s still plausible that Johnson hasn’t had an impact yet. For example, JC Penney has had some serious cash flow issues. $389 million flowed out of the company during fiscal year 2011, and $1.537 billion flowed out during the three quarters after that. Negative operating cash flows have been the culprit most recently, and Johnson certainly hopes to change that. Value metrics also aren’t working in JC Penney’s favor – price to earnings and price/earnings to growth ratios are higher for JC Penney than competitors like Kohl’s (KSS) and Macy’s (M). Additionally, JC Penney’s operating margin of 4.89% and gross margin of 38.34% are both lower than its peers.

Goldman Sachs upgraded MetLife from Neutral to Buy and applauded the company’s renewed efforts to create growth. Current problems have centered on the fact that MetLife will need to change its business in order to avoid regulation by the Federal Reserve. While the company does have one deal on the table with GE Finance (GE), the Federal Reserve is still not allowing MetLife to increase its dividend or commence share buybacks. More information about the deal with General Electric can be found here, and essentially MetLife’s goal is to rid itself of bank deposits. Once the insurer can prove to the Federal Reserve that it should not be classified as a bank holding company, it can keep less capital on hand and start redirecting it back to shareholders. MetLife’s acquisition of American Life Insurance Co., worth $16 billion, has also forced the company to re-design its strategy. For instance, American Life Insurance Co. has added some new international business to MetLife. Statistics like price to earnings, price/earnings to growth, and price to sales are pretty low for MetLife compared with competitors like Allianz (OTCQX:AZSEY), AIG and Prudential (PRU). MetLife’s margins are also pretty good – those numbers are 36.62% gross and 13.23% operating.

Needham is rating Pandora a Buy because the company is well positioned to take advantage of an economic recovery. As described here, Pandora has a lot of things going for it, however in our opinion it still looks to be bubble 2.0 material. The company just posted a quarterly profit, and its radio ratings are extremely impressive. Rankings from Triton Digital also show that Pandora is by far the most dominant player in Internet radio. Despite these trends however, Pandora stock has been falling the past few months. While shares were trading for over $15 back in November, the current stock price is just above $10. Regardless, price-to-sales ratio for Pandora is still a whopping 6.71, while fellow radio provider Sirius XM’s (SIRI) price-to-sales ratio is only 2.53. Other important competition for Pandora comes from the iHeartRadio app (made by Clear Channel) and Spotify. Essentially, the problem for Pandora is that while its user base is rapidly growing, its core features aren’t terribly difficult to replicate. The barriers to entry simply aren’t there, which is why so many other companies are putting out phone/tablet apps to compete with Pandora. If nothing else, though, Pandora’s cash flows are rock-solid. $26.88 million came in during fiscal year 2011, and $10.83 million came in during the first three quarters of 2011.

UBS raised its price target for Boeing to $72 due to new discounted cash flow analysis. In fact, many on Wall Street have had to rethink their valuation of this stock, seeing as it’s gone up approximately 20% since October. October is when Boeing began service of its new 787 planes, and many on Wall Street are speculating that Air France was the buyer of a 25-plane order announced about a week ago. This deal was actually finished in the last days of 2011, making it Boeing’s 13th order for the year. While the 787s are certainly an impressive feat of engineering, Boeing’s final delivery number for 2011 was a tad disappointing. Expectations were for Boeing to get out 480 airplanes, but the year closed with 477 being delivered. Regardless, Boeing is still the leader in this industry, as evidenced by the high price to earnings and price to sales ratios that investors are willing to pay compared with other stocks such as Lockheed Martin (LMT) and Northrop Grumman (NOC). Gross margin of 19.34% is impressive for Boeing, although operating margin of 7.68% lags behind the competition. Dividend investors should note that Boeing’s dividend yield is currently 2.40%.

Credit Suisse raised both price target and earnings estimates for International Paper due to new expectations for containerboard prices. International Paper’s price target is now $31, although the company kept the stock’s rating at Neutral. That price target is about where International Paper is trading now, and International Paper has seen quite a run-up since October. Back then the stock was trading for around $22 per share, whereas now the share price is nearly $32 per share. One piece of news that’s helped International Paper’s stock is an agreement between the company and The United Steelworkers. As discussed here, that’ll help to keep things running at the company’s corrugated box/container manufacturing facilities. International Paper is also working on acquiring Temple-Inland (TIN). The current status of the deal is that the Department of Justice has extended its regulatory review period. As for value metrics, International Paper’s price-to-earnings and price-to-sales ratios are significantly lower than MeadWestvaco (MWV) and Weyerhaeuser (WY). Meanwhile, International Paper’s margins are pretty good – those numbers are 27.22% gross and 8.56% operating. As for operating cash flows, $1.631 billion came in during 2010 and $2.038 billion came in during the first three quarters of 2011. Those inflows were crucial for fueling International Paper’s dividends and stock repurchases.

Source: 5 Stocks Seeing Big Analyst Upgrades