MORNING COFFEE

Teva to Buy Ratiopharm. Teva Pharmaceutical (TEVA) has edged out Pfizer (PFE) and Actavis in its bid for Ratiopharm. Reports say Teva and Ratiopharm are close to an agreement to purchase the company for €3.5 billion ($4.8 billion). Teva is up +2.4% in the premarket.

City of Milan Charges Banks With Fraud. The city of Milan, Italy charged Deutsche Bank (DB), JPMorgan (JPM), UBS (UBS) and Hypo Real Estate with fraud connected to the sale of derivatives. The four firms, 11 bankers and two former city officials will face trial in May for misleading the city on swaps and earning hidden fees. Prosecutors in Italy are investigating banks that have left local and national government agencies facing potential losses of €2.5 billion ($3.4 billion) from derivatives. 

IMF Says Yuan Undervalued. In addition to the U.S. IMF chief Dominique Strauss-Kahn said yesterday that the yuan is "very much undervalued."  Additionally there are rumors that China plans to stress test an appreciation of the yuan in certain provinces.

Wachovia Reaches Settlement. Wachovia (WFC) has reached a $160 million settlement with the Justice Department over charges that a failure in bank controls allowed drug traffickers to launder money. The company said it "admitted failure to identify, detect, and report suspicious transactions in third-party payment processor accounts."

Toyota Faces racketeering Charges. Toyota's (TM) is currently facing more than 80 suits in at least 40 states, and the racketeering charges bring the estimated potential liability for Toyota from $2 billion in damages to more than $10 billion. Additionally, more than 100 complaints have been received by the government from owners whose cars have been repaired experiencing the same acceleration problems.

Upgrades

Nike (NKE): FBR Capital upgraded their rating from Market Perform to Outperform and raised their target price from $67.00 to $84.00.

Burger King (BKC): Deutsche Bank upgraded their rating from Hold to Buy.

Corning (GLW): Thomas Weisel upgraded their rating from Market Weight to Overweight.

Downgrades

HSBC Holdings (HBC): FBR Capital downgraded their rating from Outperform to Market Perform.

Coverage Reiterated/Price Target Changed

Guess? (GES): Wedbush Morgan reiterated their Outperform rating and raised their target price from $47.00 to $53.00.

Guess? (GES): Brean Murray reiterated their Buy rating and raised their target price from $51.00 to $56.00.

JC Penney (JCP): Citigroup reiterated their Buy rating and raised their target price from $43.00 to $45.00.

·         Futures: Dow flat. S&P -0.1%. Nasdaq -0.2%. Crude -0.7% to $82.34. Gold -0.1% to $1123.

·         Asia: Nikkei -0.9% to 10744. Hang Seng -0.3% to 21331. Shanghai -0.1% to 3046. BSE +0.2% to 17519.

·         Europe: London flat at 5642. Paris -0.2% to 3949. Frankfurt -0.1% to 6019.