While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of International Paper (NYSE: IP ) sank 3.5% today after Deutsche Bank downgraded the paper and packaging company from buy to hold.
So what: Along with the downgrade, Deutsche lowered its price target on the stock to $51 per share (from $54), representing only about 8% worth of upside to yesterday's close. Analyst Mark Wilde thinks that the company may be investing too heavily in domestic capacity amid still-sluggish economic conditions, raising the likelihood of margin compression going forward.
Now what: Wilde now expects 2013 EPS of $3.15 (down from a prior view of $3.40) and 2014 EPS of $4.05 (down from $4.40). "Without stronger demand, IP could be forced to take more economic downtime or make permanent capacity shuts," said Wilde. "In the short-term, the issues are continued sluggish domestic c'board demand, rising inventories and some very modest pricing pressure from new capacity." With the stock still up about 40% from its 52-week lows and trading at a P/E of 20, I'd have to agree with Deutsche's view that those risks aren't being adequately discounted.
More compelling income opportunities
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.