Too often, analyst recommendations are indecisive and filled with mixed messages. Rarely do they come down hard on the buy or sell side and for that reason I don't use them but many investors do. For those who do, here's a look at some recent recommendations and my own observations about each call.

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Upgrades

Hedge fund manager Fortress Investment Group (NYSE:FIG) recently announced a second-quarter loss of $0.41 compared to a loss of $0.67 in the same quarter last year. Emboldened by the best seven-month start for the hedge fund industry in the past 10 years, Keefe Bruyette raised its rating on the stock from "Market Perform" to "Outperform" based on Fortress beating Q2 EPS estimates.

Strangely, it lowered its price target to $6.50 from $7.50. Why in the world would you do this? The stock price is close to $6.50 already. It's a classic case of sitting on the fence. Personally, I am not a fan of Fortress because of the impact it had on Intrawest, once one of North America's most entrepreneurial companies. (Thinking about relying on analyst recommendations for your next trade? We'll show you what to watch out for, read What To Know About Financial Analysts.)

Citigroup analyst Donald Fandetti upgraded American Express (NYSE:AXP) from "Hold" to "Buy" August 6, citing stabilizing credit markets and a declining rate of write-offs for the credit card lender. Fandetti upped its target price from $28 to $36 at the same time. It's a little puzzling why Citgroup didn't up the target price earlier in the summer as the markets were rolling along. Now this revision looks like an afterthought, already $3 past the old target.

As for the upgrade itself, I have no problem with it. Although its stock is up more than 70% from the start of the second quarter, it's a well-run company and industry leader and should have more room to gallop. Besides, if it's good enough for Warren Buffett, it's good enough for me.

Downgrades
Here's one that actually makes sense. Goldman Sachs dropped Lincoln Financial (NYSE:LNC) from its "Conviction Buy" list because its stock is up 60% since mid-July. That's not bad for less than one month's work. While its financial situation is improving on a quarter-to-quarter basis, it's still missing badly against last year's results. That's why it added $2 billion in capital during the quarter. Any way you slice it; this one's probably not going too far in the coming months. Good call, Goldman Sachs.

Energy Conversion Devices (Nasdaq:ENER) produces UNI-SOLAR laminates that allow businesses to more easily produce solar energy for their facilities. Heavily dependent on the commercial market, its Q3 sales were off 5.7% to $66 million from $70 million while its net income dropped to $1.3 million from $7.0 million. Clearly, it's having a tough time getting customer projects underway due to economic uncertainty and a lack of capital financing.

It's a contributing reason that Piper Jaffray downgraded it from "Neutral" to "Underweight" while also lowering its price target from $21 to $9. That's a big drop. However, if the broker believes troubles lie ahead, this definitely warrants a cut. (Stock ratings are both loved and reviled. Find out why they deserve equal measures of both, see Stock Ratings: The Good, The Bad And The Ugly.)

Initiations
Stifel Nicolaus initiated coverage of conglomerate Textron (NYSE:TXT), putting a "Hold" rating on it. The producer of Bell Helicopters, Cessna airplanes and E-Z Go golf carts has seen EPS drop from $3.71 in 2007 to $1.91 in 2008 and will be down substantially in 2009. At first glance, it appears to be a wimpy call. However, when you consider that Textron stock hasn't traded this low since 1995, the hesitation to place an initial "Sell" call on its stock is understandable. Any good news will send the stock flying. While I'm not a fan of "Hold" ratings, this one makes sense.

The Bottom Line
It's important for investors to understand the reasons behind a rating change before deciding to buy or sell a stock. Sometimes they make sense and sometimes they don't, either way you should look deeper into the numbers.

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