Friday’s Top Upgrades (and Downgrades): SCBT Financial Corporation (SCBT), First Financial Holdings, Inc. (FFCH)

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This series, brought to you by Yahoo! Finance, looks at which upgrades and downgrades make sense and which ones investors should act on. Today, our headlines include a big endorsement for a growing force in Carolina banking, SCBT Financial Corporation (NASDAQ:SCBT). Also, we get two new “neutral” ratings — one bad, one good.

Bad news first
Let’s get the bad news out of the way and discuss Stifel Nicolaus’s downgrade of IMAX Corporation (USA) (NYSE:IMAX). The big screen, 3-D moviemaker announced strong earnings yesterday, beating consensus estimates with $0.23 per share in profit and topping estimates for revenues as well.

Free cash flow at the company remains strong — stronger even than reported net income. The balance sheet looks clean, with nearly as much cash on hand as debt. And, of course, IMAX is growing strongly, with multiple recent expansions announced in Russia and a consensus long-term growth rate of 21%.

First Financial Holdings, Inc.All that being said, at a P/E ratio of more than 50, IMAX shares do look just a wee bit overvalued. The fact that Stifel is downgrading the shares after a strong earnings report may rub some shareholders the wrong way. In my Foolish opinion, though, they should to be grateful Stifel didn’t go all the way to “sell” because, at these prices, that’s exactly the rating IMAX shares deserve.

Better news next
Today’s other big move to “hold,” in contrast, should be welcomed by investors of Hewlett-Packard Company (NYSE:HPQ). Following a less-awful-than-expected Q4 report last night, Hewlett shares are getting an extra bit of bounce today as international stock star UBS removes its “sell” rating from the stock and upgrades it to “neutral.”

While objectively bad, HP’s 6% revenue decline and 12% slide in profits per share (to $0.82) still managed to beat consensus estimates handily. And ,yes, unprofitable Hewlett may be and is still pegged for 0% — as in no — earnings growth whatsoever over the next five years. But with $8.5 billion in trailing free cash flow, the stock’s trading at an awfully tempting 4.3 times annual cash profit, suggesting that even without growth, an investor can expect to get paid back on an investment here within fewer than five years. Factor in a still generous 3.2% dividend yield, and the rewards look even richer.

Long story short, while I’m not thrilled with how HP has handled itself in past years, under new CEO Meg Whitman’s leadership the stock does appear to have a chance of surviving. I wouldn’t count the company out just yet.

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