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 Synageva BioPharma (NASDAQ:GEVA) fell 3% today after Leerink Swann downgraded the biotechnology company from "outperform" to "market perform."
So what: Along with the downgrade, analyst Joseph Schwartz lowered his price target to $62 (from $66), representing about 7% worth of upside to yesterday's close. While contrarian traders might be attracted to the stock's October slump, Schwartz believes that Synageva's short-term appreciation prospects remain limited given a lack of positive catalysts over the next year or two.
Now what: Leerink believes the risk/reward trade-off is pretty balanced at the current levels.
"We believe that a lack of news flow and visibility into the market opportunity for sebelipase alfa may keep the stock relatively range-bound until ARISE pivotal trial data is reported in 2H14-1H15," noted Leerink. "We are updating our model and lowering our price target to $62 from $66 to reflect dilution from the company's recent equity offering."
But while Synageva is certainly too speculative for average investors, all of the downbeat short-term views of late might be providing patient biotech-savvy Fools with an attractive entry point.
Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.