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.
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