UBS downgraded Verizon (NYSE:VZ) from "buy" to "neutral" and took the same action with AT&T (NSYE:T) according to Briefing.com. The news service also reports that JMP upgraded Sandisk (NASDAQ:SNDK) to "market perform" from "underperform".

General Electric (NYSE: GE) was cut to Neutral from Outperform at JPMorgan, according to 24/7 Wall St. The financial website also reports that Wendy's (NYSE: WEN) waised to Equal Weight from Underweight at Morgan Stanley.

Douglas A. McIntyre

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I always love news items like this. According to Reuters, there exists a $175 hamburger. You can find it in New York at a place called The Wall Street Burger Shoppe. Presumably, big traders would be the only ones able to afford it.

Well, for those who would even think to complain about the prices at McDonald's (NYSE: MCD), Burger King (NYSE: BKC) and Wendy's (NYSE: WEN), this $175 burger should put things in perspective. It doesn't sell a lot; the news piece states that the place moves about two dozen in any given thirty-day period. The Wall Street Burger Shoppe mostly sells $4 burgers.

But, really, this $175 burger is nothing more than genius marketing. The owners are obviously not under any illusion whatsoever that they can make a great return on capital by investing in such a pricey offering. All it's meant to do is to bring publicity to the establishment. It's obviously worked. As a way of branding, this goofy pricing scheme immediately differentiates the restaurant's brand from others. In fact, it was the stated intent of the owners to have the most expensive burger in the area. It's also a great differentiator between personalities. I mean, I think you can tell a lot about a person who is actually willing to buy this thing (and, you can certainly infer a lot about the person's net worth).

Yep, those $4 burgers seem like no cost at all compared to the $175 royal dish. Perhaps either McDonald's, Burger King, or Wendy's should leverage this example of 80s-like excess to their advantage.

If I were a commercial scribe, I'd pen an ad that makes consumers who buy this thing look, at best, ill advised, and those who choose one of the big three's value menus theoretical physicists by comparison (then again, considering some of the wacky theories theoretical physicists come up with, that might not be such an apt metaphor). I could definitely see Burger King using its ghoulish regal mascot to do a comedic mini-campaign based on such a concept.

Well, I won't be digging deep into my wallet to shell out an amount too close to two hundred bucks for my taste to enjoy one of these hamburgers. I've got to fill up my gas tank, remember...

Disclosure: I don't own shares in any company mentioned here; positions can change at any time.

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McDonald's (NYSE: MCD) announced its same-store sales results for the month of April Thursday, and the data indicate a healthy fast-food business ("healthy fast food" -- isn't that an oxymoron?).

Global comps as a whole increased 5%. Comps for European locations increased 6.3%, and the Asia/Pacific/Middle East/Africa segment saw a 7.8% rise in same-store sales. McDonald's restaurants in the States increased an anemic 2%. The weak domestic sales really need to be addressed so that they can pull more weight and add to the cool story that is McDonald's.

The stock has been a pretty decent performer over the last several months, rising over 6% over the three-month timeframe, and over the one-month period, it is up over 7%. And the longer-period returns from the past are even more impressive. Imagine how McDonald's stock would perform if management figured out how to get people to visit the U.S.'s Golden Arches more often. I suppose April's performance should be praised since March saw a decline in U.S. comps, as this article makes plain, but that depreciation was the first one in five years, and that says to me that McDonald's needs to be careful.

It's all about the marketing, of course. There are a lot of choices out there -- Burger King (NYSE: BKC), Wendy's (NYSE: WEN) and Yum! Brands (NYSE: YUM) -- so I think promotion of the brand is key. Some will disagree and say that menus and pricing are the big drivers -- they are important, don't get me wrong, but perhaps McDonald's needs to take a cue from Burger King and its campaign with the creepy-king thing -- those commercials are clever. Still, if this comps reports says anything, it says that you shouldn't count the clown out -- McDonald's is a blue-chip stock that is near a 52-week high, and not only is it a great long-term/core holding, but it's also quite possibly an interesting shorter-term idea as well.

Disclosure: I don't own shares in any company mentioned here; positions can change at any time.

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McDonald's (NYSE: MCD) may be the big brand name in the fast-food industry, but don't discount Burger King (NYSE: BKC). The King reported its fiscal Q3 numbers on Thursday, and they were pretty regal indeed.

Revenues increased 10%, and earnings per share did even better, rising 20% to 30 cents (that beat earnings by three pennies, says Briefing.com). Now, when talking about retail stores and fast-food joints, the issue of same-store sales always comes up, since it's such an important element to consider (be sure to keep in mind that comps must always be put in an overall context, especially if you are only measuring a one-month timeframe). Global comps increased 5.8% for the quarter, a good showing for Burger King which wants to become a force to be reckoned with around the world. The domestic side of things isn't doing too badly either as comps in the United States and Canada moved up 5.4%. Restaurant margins, however, decreased due to the challenging commodity-cost environment we all live in nowadays. Otherwise, I see these earnings as very positive for Burger King, and I am bullish on the stock.

One thing I love about this company is its catchy advertising campaigns. Seriously, that King character is creepy, but it injects an edge to the commercials that the teenage/college-age crowd really respond to (although, ironically enough, I'm sure a lot of folks find Ronald McDonald, a clown, rather creepy as well). Burger King knows how to market itself and how to catch the attention of the youth who love to stock up on fast food at the drive-thru. Yep, the Big Mac is getting a lot of competition from the Whopper, and these earnings results show that Burger King is indeed differentiating itself through an innovative image. McDonald's, Wendy's (NYSE: WEN), and Yum! Brands (NYSE: YUM) need to watch out for the King (I'm going to have nightmares tonight for sure).

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

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• DJIA 12,892.84 (+43.89; +0.34%)
• S&P500 1,397.86 (+9.04; +0.65%)
• NASDAQ 2,422.93 (-5.99; -0.25%)
• 10YR-TBond 3.866% (+0.039)
• 52-WEEK LOWS (AAI, HRZ, IAR, LEE, NTGR, PAY, UCBH, VDSI)

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MOST NOTEWORTHY:

• Cowen upgraded Northrop Grumman (NYSE: NOC) to Outperform from Neutral following the Q1 report based on accelerating growth. Shares were also upgraded at JP Morgan to Overweight from Neutral.
  
• Friedman Billings upgraded Phase Forward (NASDAQ: PFWD) to Outperform from Market Perform following the solid Q1 report and views guidance as beatable.
  
• CIBC raised Celestica (NYSE: CLS) to Sector Outperformer from Sector Performer following Q1 results, citing end markets that look stable.

• JP Morgan upgraded the Consumer Discretionary Sector to Overweight from Underweight.
  
• Wendy's (NYSE: WEN) was raised to Neutral from Sell at Goldman.
  
• Progenics Pharmaceuticals (NASDAQ: PGNX) was upgraded at Citigroup to Hold from Sell.
  
• Merrill Lynch raised Wal-Mart (NYSE: WMT) to Buy from Neutral.

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Wendy's (NYSE: WEN) finally sold the company to Nelson Peltz. The price which Peltz company Triarc paid was about $26.78 per share only a 6% premium according to the AP. One of the reasons the firm went for so little may be that there were no other buyers. The Wall Street Journal writes that "The move puts an end to the year-long saga that began when Wendy's first said it would consider a sale last April after Mr. Peltz began pressuring the chain."

Peltz has gotten a very good deal and Wendy's shareholders have not. The chain's current stock price is near its 52-week low. Over the last six months, the company's shares are down about 23% while rivals Burger King (NYSE: BKC) and McDonald's (NYSE: MCD) are up about 5%. Of course, they are the market share leaders and deserve some premium for that.

But if fast food does well, especially in a poor economy when people cannot afford more expensive restaurants, Peltz will have picked up a prize. When a recovery comes around, Wendy's could become a very nice business and the billionaire will look like a genius.

Douglas A. McIntyre is an editor at 247wallst.com.

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Before the bell: Futures down on SBUX, AMZN, despite AAPL, Ford

Dow Chemical (NYSE: DOW) reported a smaller-than-forecast 3% profit drop Thursday and said it would have a good second quarter. Higher feedstock and energy costs were blamed for the drop. The chemical giant reported earnings of 99 cents per share, beating the 94 cents estimate.

• 3M Co. (NYSE: MMM) reported a 28% drop in tits first-quarter earnings while sales rose 9% and affirmed 2008 guidance.
• Newell Rubbermaid (NYSE: NWL) reported that first-quarter net income rose 15% on 3.6% higher sales, and it cut its estimate of adjusted earnings for the year.
• Motorola (NYSE: MOT) reported a loss of $0.05 per share, excluding non-recurring items, beating estimates by 2 cents. The guidance, however, was lowered. MOT shares are down 4.7% in premarket trading.

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Yum! Brands (NYSE: YUM) reported Q1 numbers Tuesday after the bell, and the company came through with double-digit growth on the bottom line. Net sales increased 8%, and earnings per share, adjusted for special items, increased 19% to $0.42.

There's a lot of cool stuff in this report that shareholders will view in a positive light. The international story for Yum! is a good one, with operating profit for this part of the company increasing 18%. China continues to be a strong territory for the KFC, Taco Bell, and Pizza Hut brands -- as many have pointed out, Yum! is a great way to gain exposure to this market. And how about this -- management saw fit to buy back shares of the company to the tune of almost a billion bucks! That says something to shareholders, as does the increased guidance. Granted, Yum! upped the per-share expectation by only a couple of pennies to $1.87 (excluding items), but that's still the right direction, isn't it? Also, according to Briefing.com, the company beat Wall Street's expectations by two cents.

Yum!, which competes with McDonald's (NYSE: MCD), Burger King (NYSE: BKC), Wendy's (NYSE: WEN), and all manner of neighborhood eateries, needs to continue the good fight on the home front. It reversed a negative same-store sales trend this past quarter, but management must not rest on this nice stat -- Yum! must explore better marketing campaigns and branding tactics to keep the comps headed higher. Yum!'s stock is not far from a 52-week high, but I'm currently bullish on its prospects.

Disclosure: I own none of the companies mentioned here; positions can change at any time.

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Nelson Peltz isn't too happy with Wendy's (NYSE: WEN), which quickly rejected two of his bids for the company, including a plan to combine Wendy's with Arby's, a fast-food chain owned by Triarc (NYSE: TRY), a company chaired by Mr. Peltz.

Normally I'm pretty sympathetic to the campaigns of activist investors, but Peltz has a pretty poor record on corporate governance. During his proxy fight with Heinz back in 2006, the company responded to his calls for change with this: "Triarc received a corporate governance rating of 21.5, exceeding only 21.5% of all companies in the S&P SmallCap 600 and ranking it in the bottom quartile. Separately, Corporate Library gave Triarc an 'F' on overall board effectiveness -- the lowest possible rating."

So it appears that Peltz may not be walking corporate governance talk. But then again, Wendy's has also been a prodigious destroyer of shareholder value of late, so this is kind of like trying to decide between leaving the kids with Britney or K-Fed.

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• Mattel (NYSE:MAT) to report Q1 earnings; conference call at 8:30am.
• Halliburton (NYSE:HAL) reports Q1 earnings; conference call at 9:00am.
• Bank of America (NYSE:BAC) to report Q1 earnings; conference call at 9:30am.
• Toronto-Dominion (NYSE:TD) t o hold conference call about the acquisition of Commerce Bancorp (CBH) at 11:00am.

• Wyeth (NYSE:WYE) to report Q1 earnings; conference call at 8:00am.
• The Federal Reserve to host a meeting regarding the Countrywide Financial (NYSE:CFC) takeover by Bank of America at 9:30am.
• AT&T (NYSE:T) to report Q1 earnings; conference call at 10:00am.
• Lockheed Martin (NYSE:LMT) to report Q1 earnings; conference call at 11:00am.
• Yahoo (NASDAQ:YHOO) to report Q1 earnings; conference call at 5:00pm.

• Biovail (NYSE:BVF) PDUFA date for NDA of BVF-033 for the treatment of depression.
• UPS (NYSE:UPS) to report quarterly earnings; conference call at 8:30am.
• General Motors (NYSE:) to hold conference call on 1Q08 global sales at 9:00am.
• Delta (NYSE:DAL) to report Q1 earnings; conference call at 10:00am.
• Amazon.com (NASDAQ:AMZN) to report Q1 earnings; conference call at 5:00pm.

• Hershey (NYSE:HSY) to report Q1 earnings; conference call at 8:30am.
• Microsoft (NASDAQ:MSFT) to report Q3 earnings; conference call at 5:30pm.

• Wendy's (NYSE:WEN) to report Q1 earnings; conference call at 9:00am.

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MOST NOTEWORTHY:

• Keefe Bruyette believes Invesco's (NYSE:IVZ) initiatives will drive significant revenue and operating leverage to any improvement in the operating environment. The firm started shares with an Outperform rating and $28 target. Visa was started ast Cowen with an Outperform rating, as they are positive on the Visa's growth prospects and attractive business model.
  
• Keefe Bruyette also recommends owning Visa (NYSE:V), assuming coverage with an Outperform rating and $80 target, and established FY08, FY09, and FY10 EPS estimates of $1.89, $2.33 and $2.80.
  
• Netscout Systems (NASDAQ:NTCT) was initiated at ThinkEquity with a Buy rating and $13 target. ThinkEquity believes Netscout is well positioned to outperform and win share in its addressable market niche following the Network General acquisition. Additionally, the firm views NTCT as an attractive takeover candidate for larger infrastructure management players.

• JP Morgan initiated Signature Bank (SBNY) with a Neutral rating.
  
• Wendy's (WEN) was reinstated at Goldman with a Sell rating and $21 target.
  
• Needham started NeuStar (NSR) with a Hold rating.

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McDonald (NYSE: MCD) has issued a press release recently concerning the use of cellphone coupon marketing. The fast-food juggernaut wants its consumers to have the ability to snag a coupon whenever they desire and by
hooking up with a company called Cellfire, McDonald's is hoping it can establish a relationship with some of the
hip texters out there.

Cellphone users who download the Cellfire app can then text a certain number and receive a special code good for a specific offer. According to the release, McDonald's fans can take advantage of a free iced coffee promotion through April 27 in certain locations in Utah, Wyoming, and Nevada.

McDonald's knows we're an on-the-go society, and it obviously wants to leverage the fact that mobile devices are no longer just for talking -- we text, we play games, we surf the net, and, as I recently observed, we can even shop on Amazon on our cells (I say "we," but I should point out that I do not own a cell phone, believe it or not). However, as I stated in my previous post, I'm not so certain that Amazon's text-shopping service will take off.

In this case, though, I think consumers might indeed be apt to send a quick text and save some cash at their favorite fast-food joint. It's a simple protocol that just might inspire a significant amount of users to stop at their local Mickey Dee's establishment while running here and there. Certainly a lot of the youthful demographic will be targeted with this initiative.

I see the merit in this experiment. According to a Brandweek piece, consumer companies such as Procter & Gamble (NYSE: PG), Clorox (NYSE: CLX) and General Mills (NYSE: GIS) are also interested in coupon distribution via cellphones.

Obviously, traditional methods of distributing coupons won't disappear, but cell-phone marketing seems to me to be a great way to market to the youth and anyone who's away from home. Fast-food entities such as Burger King (NYSE: BKC) and Wendy's (NYSE: WEN), in addition to McDonald's, will benefit from an exploration of the limits of cell-phone targeted coupons.

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

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I was in a fast-food frame of mind last night, so I thought I'd check out Wendy's (NYSE: WEN) same-store sales report from last week. For the first quarter, Wendy's average same-store sales at franchise locations in the United States were essentially flat, declining by a mere 0.1%. However, in the year-ago period, the performance was a lot better, as comps increased 3.7%. Average same-store sales at company locations declined 1.6%; this compares to an increase of 3.8% in last year's quarter.

The early Easter holiday and inclement weather were sourced as reasons for the poor performance. Hmmm...not so sure about that. Wendy's might have just dropped the ball this time around. Hey, it's not easy competing with Burger King (NYSE: BKC) and McDonald's (NYSE: MCD). As a matter of fact, in the case of Burger King, you have to admit that it does have a pretty edgy marketing campaign currently supporting its brand equity (I love the company's humorous commercials).

Comps aren't everything to a fast-food chain's story, but this lackluster performance doesn't compel me to open the URL to my broker and place an order for shares of the company. Complicating things is the fact that Wendy's has expressed its desire to sell itself to a buyer. This makes the situation speculative, to me at least. For now, I'll stay away from Wendy's as a potential investment idea, but I do continue to watch McDonald's -- I've been perpetually interested in owning that one, but haven't pulled the trigger yet. I will admit, however, that Wendy's burgers are pretty cool...

Disclosure: I don't own shares in any of the companies mentioned; positions can change at any time.

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CKE Restaurants (NYSE: CKR) reported earnings for the fourth quarter yesterday after the bell. Total revenue decreased 3% for the quarter, and net income from continuing operations was $0.00 per diluted share, which wasn't too good in comparison to last year's number, which was $0.17 per diluted share. Total revenue was flat for the year, and net income from continuing operations was $0.57 per diluted share versus $0.77 per diluted share in the previous fiscal year.

CKE Restaurants, which operates the Carl's Jr. and Hardee's brands, did not impress analysts, as earnings expectations for the quarter were missed by two pennies. I myself wasn't too impressed with the entire report. Same-store sales increased 0.9% at Carl's Jr. and 2% at Hardee's for 2007 -- I'm not going to jump up and down over that bit of news. In addition, costs are up because of inflationary pressures, and revenues have obviously been challenged. There's not a lot that I like about this story.

CKE's stock is certainly on the lower end of its 52-week range, but I can't say it is necessarily cheap; it closed yesterday at $12.45 -- the high for the year on the stock is $23.24. This is a situation that calls for an old standby: "There are better opportunities out there in this space." For me personally, if I'm looking at the burger business, I'm way more likely to consider a McDonald's (NYSE: MCD), a Burger King (NYSE: BKC), or a Wendy's (NYSE: WEN) before I entertain CKE as an investment idea. Although they don't do burgers (so far as I know), I'd even look at a Yum! Brands (NYSE: YUM) before CKE. These companies have better brand equities in my estimation. CKE may turn itself around, but I just wasn't impressed by my look at its data.

Disclosure: I own none of the companies mentioned here; positions can change at any time.

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Chipotle Mexican Grill (NYSE: CMG) experienced some delicious growth over its fourth quarter and full-year reporting period. As the press release issued on Valentine's Day after the market closed indicated, Q4 revenues spiced up almost 32% to $288.9 million, and diluted earnings soared 61% to $0.53 per stub. For the full year, revenues jumped 32% to $1.1 billion, and diluted earnings rocketed 66% to $2.13 per share.

But was this enough to satisfy the after-hours market? Nope -- at the time of this writing, the after-hours quote on Chipotle's stock was down almost 13%. I'll give you a second or two to guess why. Got it yet? Sure you do -- even if you hadn't already read the headlines, you must have intuited that Chipotle didn't meet analyst expectations. The sacrosanct Wall Street crowd wanted a couple pennies more for the quarter.

Well, I say the Chipotle story looks pretty good from where I'm sitting. Restaurant operating margins are up, comps are up over 10% for the quarter and the year, and new stores will continue to be rolled out. Plus, operational cash flow increased 42%. Chipotle, which used to be a part of McDonald's (NYSE: MCD), is becoming a major brand in the restaurant sector, and is a strong competitor against related companies such as Burger King (NYSE: BKC), Wendy's (NYSE: WEN), and Yum! Brands (NYSE: YUM).

Yes, economic times will be difficult going forward, as Ben Bernanke has warned, but I've got a sneaking suspicion Chipotle Mexican Grill's stock will recover from the recent pullback from its 52-week high of better than $155.

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