Sprint (S) (SOHU) (FFIV) (FHN) (AEC) (BBT) Upgraded

Sprint Nextel (NYSE: S), Sohu.Com Inc. (NASDAQ: SOHU), F5 Networks (NASDAQ: FFIV), First Horizon National Co. (NYSE: FHN), Associated Estates (NYSE: AEC) and BB&T (NYSE: BBT) upgraded by analysts.

Sprint Nextel (NYSE: S) was upgraded by RBC Capital from a “Sector Perform” rating to an “Outperform” rating. They have a price target of $6.00 on the company.

Sohu.Com (SOHU) was upgraded by Credit Agricole from an “Underperform” rating to a “Buy” rating.

F5 Networks (FFIV) was upgraded by Ticonderoga from a “Neutral” rating to a “Buy” rating. They have a price target of $130.00 on the company.

First Horizon National (FHN) was upgraded by Compass Point from a “Sell” rating to a “Neutral” rating.

Associated Estates (AEC) was upgraded by Robert W. Baird from a “Neutral” rating to an “Outperform” rating. They have a price target of $21.00 on the company, up from $18.00.

BB&T (BBT) was upgraded by Rochdale Securities from a “Hold” rating to a “Buy” rating.

FBR on Reits UDR (NYSE:UDR), Associated Estates (NYSE:AEC), Equity Lifestyle (NYSE:ELS), Public Storage (NYSE:PSA), Sovran Self Storage (NYSE:SSS) if

UDR (NYSE:UDR), Associated Estates (NYSE:AEC), Equity Lifestyle (NYSE:ELS), Public Storage (NYSE:PSA) and Sovran Self Storage (NYSE:SSS) were analyzed by FBR as to the effect an increase in interest rates would have on the REITs.

FBR concluded, "In recent years, REIT earnings have been goosed by the low rate environment, as companies helped themselves to healthy servings of floating-rate debt. What happens to earnings if rates rise, without any extra growth, other than what is already cooked into 2011 estimates? We ran a simple screen on the short-lease universe (apartments, student and manufactured housing, and self storage). We excluded any debt that is swapped, but included any debt that is capped, and assumed no refi activity (the latter assumption being somewhat unlikely). For some companies there could be downside to current 2011 FFO estimates; for others there is minimal risk. Below, we highlight the most and least impacted REITs, based on a 100 basis point increase in underlying rates. See page
two for a full ranking."

The following companies could see the biggest percentage decline to our forecasted 2011 FFO per share estimates in the test scenario: UDR (Market Perform) and Associated Estates Realty Corp. (Outperform, –4.1%)

The following companies could see the smallest percentage decline to our forecasted 2011 FFO per share estimates in the test scenario: Equity Lifestyle Properties (Market Perform), Public Storage (Underperform, 0%), and Sovran Self Storage (Outperform).

Associated Estates (NYSE:AEC) Avalonbay (NYSE:AVB), Essex Property (NYSE:ESS), Home Properties (NYSE:HME), Sovran (NYSE:SSS), U-Store-It Trust (NYSE:YSI) Top FBR Picks in Sector

Commenting on commercial real estate, FBR Capital give its top picks and those they believe will lag going into 2011, their top picks include Associated Estates Realty (NYSE:AEC) Avalonbay Communities (NYSE:AVB), Essex Property Trust (NYSE:ESS), Home Properties (NYSE:HME), Sovran Self Storage (NYSE:SSS), and U-Store-It Trust (NYSE:YSI).

FBR gave its reasoning, saying, "Commercial real estate looks to start 2011 in a curious place: pricing is robust in both private and public markets, investor appetite for yield continues unabated, and the cost to do business is at historic lows; just below the surface, however, fundamental recovery is ephemeral, at best - tainting outward market exuberance with an undercurrent of worry. As we start the year, we maintain positive views of most segments within our coverage universe. We believe that once again the single biggest risk lies within the credit markets, as an unsustainably low rate environment props prices, earnings, and hopes. That said, we continue to underwrite a low rate environment in the near term, given the stubbornness of the current economic malaise and reactionary monetary policy. We expect investors will continue to look a blind eye at this risk given the hunger for yield, which is especially beneficial to the finance and mortgage names."

"In this context, our top picks are generally focused on earnings growth, attractive (safe, in our view) yield, and pockets of fundamental recovery. We expect most of the group to remain in an expansionary period. Cap rate compression is likely to continue at the “B/C” asset quality level, while the “A” quality assets more or less stabilize. Along these lines, signs of further market bifurcation are likely in some sectors. We expect fundamental improvement to continue overall, with outright inflection in the short lease arena (lodging, storage, apartments), while longer lease recovery lags (office, industrial, retail)."

"Apartment and self storage. We maintain a positive view of the trajectory of multifamily and self storage fundamentals; however, we do remain cautious on the basis of valuations, given pricing today that is being propped by government-sponsored financing and aggressive core revenue performance expectations. We expect the short-lease REITs to remain in an expansionary period so long as access to low-cost capital remains, while operations continue to improve steadily. Overall, we expect aggregate returns for the multifamily stocks to be in line with the RMZ (+11% for the year). Our top picks within the sector include Associated Estates Realty,Avalonbay Communities, Essex Property Trust, Home Properties, Sovran Self Storage, and U-Store-It Trust; we expect Camden Property Trust (NYSE:CPT), Equity Residential (NYSE:EQR), Mid-America Apartment Communities (NYSE:MAA), and Public Storage (NYSE:PSA) to lag."

Associated Estates closed Monday at $15.22, down $0.15, or 0.98 percent. Avalonbay closed at $112.17, down $0.95, or 0.84 percent. Essex Property ended the day at $113.20, up $0.47, or 0.42 percent. Home Properties was at $54.77, up $0.07, or 0.13 percent.
U-Store-It Trust closed at $9, up $0.21, or 2.39 percent.

Colonial Properties (NYSE:CLP), Mid-America Apartment Communities (NYSE:MAA), Camden Property (NYSE:CPT) FBR's Top REIT Picks

Taking into account the regional outlook for REITs in 2011, FBR said their favorite picks in the group are Colonial Properties (NYSE:CLP), Mid-America Apartment Communities (NYSE:MAA) and Camden Property (NYSE:CPT).

On the other hand, the weakest outlooks in the group are Equity Residential (NYSE:EQR), AvalonBay Communities (NYSE:AVB), and Associated Estates (NYSE:AEC).

FBR said, "In our MSA Monitor screen, we utilize 3Q10 REIT data and current one-, two- and three-year forward forecasts from a variety of data providers, coupled with our proprietary model, and conclude that Colonial Properties Trust (Market Perform), Mid-America Apartment Communities (Underperform), and Camden Property Trust (Underperform) could have the strongest 12-month-forward regional outlooks. Equity Residential (Underperform), AvalonBay Communities (Outperform), and Associated Estates (Outperform) could have the weakest.

"Following the climb by HME were move-ups for CPT and MAA, unsurprising given the high Texas/Sunbelt exposure. Stocks that declined in the current ranking were ESS and AVB, both falling two spots, followed by single-spot drops by AIV, AEC, and UDR. Remaining unchanged were CLP and EQR."

Colonial Properties closed Friday at $17.96, up $0.39, or 2.22 percent. Mid-America was at $62.87, up $0.99, or 1.60 percent. Camden ended at $52.36, up $0.98, or 1.91 percent.

Equity Residential ended the week at $51.56, up Friday by $0.36, or 0.70 percent. Avalonbay closed at $113.12, up $2.64, or 2.39 percent. Associated Estates closed at $15.37, up $0.09, or 0.59 percent.