Special Reports

Discovery Laboratories (Nasdaq: DSCO) 47% LOWER; Discovery Labs learned that the FDA will now apply a newly-defined standard to determine whether Discovery Labs has adequately demonstrated comparability of Surfaxin clinical to commercial drug product.

Navisite (Nasdaq: NAVI) 20% HIGHER; bouncing after recent weakness.

Sepracor (Nasdaq: SEPR) 18% LOWER; news came out after the close that SEP-225289 did meet the primary efficacy endpoint and separately the company announced that the FDA put two Lunesta pediatric studies on hold.

Avanir Pharmaceuticals (Nasdaq: AVNR) 15% HIGHER; still seeing strength after being added to the Russell 3000 Index.

Tivo (Nasdaq: TIVO) 15% LOWER; announced that U.S. Court of Appeals for the Federal Circuit granted the request of EchoStar (Nasdaq: SATS) and its related companies to stay the contempt order imposed by the U.S. District Court pending the outcome of EchoStar's appeal.

Elan (NYSE: ELN) 14% HIGHER; johnson & Johnson (NYSE: JNJ) and Elan Corporation plc announced a definitive agreement whereby Johnson & Johnson will acquire substantially all of the assets and rights of Elan related to its Alzheimer's Immunotherapy Program (AIP Program), through a newly formed company. In addition, Johnson & Johnson, through its affiliate, will invest $1 billion in Elan in exchange for newly issued American Depositary Receipts (ADRs) of Elan which will represent 18.4% of Elan's outstanding ordinary shares.

Unify Corp. (NASDAQ: UNFY) 13% LOWER; reported Q4 EPS of $0.07, ex-items, compared to $0.08 in the same quarter last year. Revenue for the quarter was $4.6 million, versus $5.1 million in Q408. Sees FY10 sales in the range of $23.5-$28.5 million. Non-GAAP income for the year is expected to be $2-$4.5 million.

Evergreen Solar (Nasdaq: ESLR) 12% HIGHER; JP Morgan upgrades Evergreen Solar from Underweight to Overweight and raises their price target to $5.

EXFO Electro-Optical Engineering (Nasdaq: EXFO) 12% HIGHER; Thomas Weisel upgrades EXFO Electro-Optical from Marketweight to Overweight.

Illumina Inc. (Nasdaq: ILMN) 11% LOWER; sees second quarter revenue of approximately $161 million compared to guidance of $168 to $173 million. The Wall Street consensus is $172.55 million.

Manhattan Associates (Nasdaq: MANH) 9% LOWER; lowered its Q2 adjusted EPS expectations to a range of $.08 to $.12 per share and GAAP earnings expectations to a range of a loss of $.09 to a loss of $.05. This compares with the Company's previous adjusted EPS guidance range of $.15 to $.30 and GAAP EPS range of a loss of $.02 to a profit of $.13. The consensus is a profit of $.22.

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UPGRADES:

JP Morgan upgrades Evergreen Solar Inc. (Nasdaq: ESLR) from Underweight to Overweight and raises their price target to $5.

Thomas Weisel upgrades EXFO Electro-Optical (Nasdaq: EXFO) from Marketweight to Overweight. Price target $4.

JPMorgan upgrades SunPower (Nasdaq: SPWRA) from Underweight to Neutral.

Morgan Stanley upgrades Continental Airlines (NYSE: CAL) from Equalweight to Overweight. Price target $12.

Kaufman Bros upgrades Take-Two Interactive Software (Nasdaq: TTWO) from Hold to Buy and raised their price target from $8 to $14.

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DOWNGRADES:
UBS downgrades Dynegy (NYSE: DYN) from Neutral to Sell with a downside price target of $1.80. Shares of DYN closed at $2.29 yesterday.

Morgan Stanley downgrades Southwest Airlines (NYSE: LUV) from Equalweight to Underweight.

Morgan Stanley downgrades Hawaiian Holdings (NYSE: HA) from Overweight to Equalweight.

JPMorgan downgrades First Solar (Nasdaq: FSLR) from Overweight to Neutral.

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NEW COVERAGE:
Deutsche Bank initiates coverage on Cisco Systems (Nasdaq: CSCO) with a Buy rating and $26 price target.

Morgan Stanley initiates coverage on Delta Air Lines (NYSE: DAL) with an Overweight, citing valuation after recent selling pressure.

JP Morgan initiates coverage on Energy Conversion Devices, Inc. (Nasdaq: ENER) with an Overweight rating and $28.50 price target.

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StreetInsider.com Notable Mergers and Acquisitions of the Day:

• Johnson & Johnson (NYSE: JNJ) and Elan Corporation plc (NYSE: ELN) announced a definitive agreement whereby Johnson & Johnson will acquire substantially all of the assets and rights of Elan related to its Alzheimer's Immunotherapy Program (AIP Program), through a newly formed company. In addition, Johnson & Johnson, through its affiliate, will invest $1 billion in Elan in exchange for newly issued American Depositary Receipts (ADRs) of Elan which will represent 18.4% of Elan's outstanding ordinary shares.
  
  In consideration for the transfer of these rights and assets, Elan will receive a 49.9% equity interest in the newly formed Johnson & Johnson company that will acquire the AIP Program. Elan will be entitled to a 49.9% share of the profits and certain royalty payments upon the commercialization of products under the collaboration with Wyeth.
  
  
• International Assets Holding Corporation (Nasdaq: IAAC) and FCStone Group, Inc. (Nasdaq: FCSX) announced that they have signed a to merge in a share swap that creates a combined company with a market capitalization of approximately $260 million.
  
  
• Exelon Corporation (NYSE: EXC) increase in its offer to acquire all of the outstanding NRG (NYSE: NRG) common stock in an all-stock transaction with a fixed exchange ratio of 0.545 of a share of Exelon common stock for each NRG share, a 12.4% increase over the initial exchange offer of 0.485. Exelon's increased offer represents value of over $3 billion to NRG shareholders.
  
  Based on yesterday's close the deal is worth $28.10 per share to NRG shareholders, versus yesterday's NRG close of $26.05.
  
  
• Hewitt Associates (NYSE: HEW) has acquired the remaining interest in BodeHewitt AG & Co KG, a German pensions and benefits consulting specialist, from Bayerische Hypo- und Vereinsbank AG (HVB).
  
  
• Landstar System (Nasdaq: LSTR) announced the acquisition of two supply chain transportation integration companies, Premier Logistics, Inc. (Premier) and A3 Integration LLC.

Discovery Laboratories (Nasdaq: DSCO) 53% LOWER; learned that the FDA will now apply a newly-defined standard to determine whether Discovery Labs has adequately demonstrated comparability of Surfaxin clinical to commercial drug product. This new standard represents a significant hurdle for approval of Surfaxin.

Lear Corporation (NYSE: LEA) 22% LOWER; NYSE Regulation has determined that the common stock of Lear Corporation (NYSE: LEA) should be suspended immediately, saying it is no longer suitable for listing on its planned Chapter 11 filing.

Elan Corporation (NYSE: ELN) 19% HIGHER; Johnson & Johnson (NYSE: JNJ) will acquire substantially all of the assets and rights of Elan related to its Alzheimer's Immunotherapy Program (AIP Program), through a newly formed company. In addition, Johnson & Johnson, through its affiliate, will invest $1 billion in Elan in exchange for newly issued American Depositary Receipts (ADRs) of Elan which will represent 18.4% of Elan's outstanding ordinary shares.

QuickLogic (Nasdaq: QUIK) 17% HIGHER; expects total Q2 revenue to be between $2.8 million and $3.0 million, which is below the guidance issued on April 28, 2009 versus consensus estimates of $4.90M.

Sepracor (Nasdaq: SEPR) 15% LOWER; SEP-22528 Fails To Meet Endpoint and Two Lunesta Studies Put On Hold.

Illumina (Nasdaq: ILMN) 14% LOWER; sees q2 revenue of approximately $161 million compared to guidance of $168 to $173 million. The Wall Street consensus is $172.55 million.

Manhatton Associates (Nasdaq: MANH) 12% LOWER; lowered its Q2 adjusted EPS expectations to a range of $.08 to $.12 per share and GAAP earnings expectations to a range of a loss of $.09 to a loss of $.05. This compares with the Company's previous adjusted EPS guidance range of $.15 to $.30 and GAAP EPS range of a loss of $.02 to a profit of $.13. The consensus is a profit of $.22.

Evergreen Solar (Nasdaq: ESLR) 6% HIGHER; JP Morgan upgrades Evergreen Solar from Underweight to Overweight and raises their price target to $5.

DemandTec (Nasdaq: DMAN) 4.60% LOWER; reports Q1 non-GAAP EPS of $0.00, versus the analyst estimate of ($0.02). Revenue for the quarter was $19.5 million, versus the consensus of $19.44 million.

International Assets (Nasdaq: IAAC), FC Stone (Nasdaq: FCSX) indicated HIGHER; announced that they have signed a definitive agreement to merge in a share swap that creates a combined company with a market capitalization of approximately $260 million.

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Lear Corporation (NYSE: LEA) 36% LOWER; announced today that the Company has reached an agreement in principle regarding a consensual debt restructuring with steering committees representing its secured lenders and its bondholders. The Company plans to commence shortly the proposed restructuring under court supervision pursuant to a voluntary bankruptcy filing under Chapter 11 of the United States Bankruptcy Code by the Company and certain of its U.S. and Canadian subsidiaries. The agreement in principle provides that, subject to certain limited exceptions, Lear's trade creditors will be paid in full.

Discovery Laboratories, Inc. (Nasdaq: DSCO) 33% LOWER; announces today, after receipt of written minutes from the United States FDA, the results of its June 2, 2009 meeting with the FDA. This meeting followed the FDA's April 17 Complete Response Letter for Surfaxin(r) (lucinactant) for the prevention of Respiratory Distress Syndrome in premature infants and was convened to discuss resolution of the remaining primary issue necessary for marketing approval of Surfaxin. Click here for the full report.

Illumina Inc. (Nasdaq: ILMN) 18% LOWER; sees second quarter revenue of approximately $161 million compared to guidance of $168 to $173 million. The Wall Street consensus is $172.55 million. Click here for the full report.

Unify Corp. (NASDAQ: UNFY) 17.3% LOWER; reports Q4 EPS of $0.07, ex-items, compared to $0.08 in the same quarter last year. Revenue for the quarter was $4.6 million, versus $5.1 million in Q408. Sees FY10 sales in the range of $23.5-$28.5 million. Non-GAAP income for the year is expected to be $2-$4.5 million.

Sepracor, Inc. (Nasdaq: SEPR) 15% LOWER; SEP-22528 Fails To Meet Endpoint and Two Lunesta Studies Put On Hold.

DemandTec (Nasdaq: DMAN) 5.1% HIGHER; reports Q1 non-GAAP EPS of $0.00, versus the analyst estimate of ($0.02). Revenue for the quarter was $19.5 million, versus the consensus of $19.44 million.

Quest Software Inc. (NASDAQ: QSFT) 4% HIGHER; will replace Wind River Systems Inc. (NASDAQ: WIND) in the S&P MidCap 400 after the close of trading on a date to be announced.

Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP) 3.4% HIGHER; Sucampo Pharma Americas, Inc., a wholly owned subsidiary of Sucampo Pharma, today reported top-line results from its phase 2 clinical trial of orally administered cobiprostone for the prevention of gastric ulcers and other gastrointestinal injuries in patients treated with non-steroidal anti-inflammatory drugs. Click here for the full report.

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