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 Intuit (NASDAQ: INTU) climbed 1.5% today after Bank of America upgraded the accounting software specialist from neutral, to buy.
So what: Along with the upgrade, analyst Kash Rangan raised his price target to $78 (from $69), representing about 16% worth of upside to yesterday's close. While value investors might be turned off by the stock's steady surge since late June, Rangan believes that continued growth at its small-business segment should fuel even further price appreciation.
Now what: BofA likes Intuit's risk/reward trade-off at the current levels. "We are upgrading INTU, as we see a changing in guard with the SMB business growing increasingly important," wrote BofA. "With consumer tax expectations moderating, we believe the opportunity in SMB/Pro Tax will be increasingly apparent." With Intuit shares surging to a new 52-week high today and trading at a 20-plus P/E, I'd wait for some of the enthusiasm to fade before betting too much on those prospects.
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