While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Michael Kors Holdings (NYSE:KORS) have slipped more than 3% so far today after Citigroup downgraded the fashion apparel and accessories specialist from buy to neutral.

So what: Along with the downgrade, analyst Oliver Chen lowered his price target to $93 (from $95), representing about 13% worth of upside to yesterday's close. While momentum traders might be attracted to the stock's sharp rise over the past year, Chen believes that sluggish watch sales of late -- from both Macy's and Fossil -- suggest that Michael Kors' 2014 won't be quite as spectacular.

Now what: According to Citigroup, Michael Kors' risk/reward tradeoff isn't too appealing at this point. "We're lowering our rating to Neutral based on the view of fairer intrinsic valuation given KORS' +60% stock run in 2013, strong comps which will likely still exceed guidance (+15-20%) but to a lesser extent, accessory sector read-throughs which convey a possibility of lack of upside," noted Citigroup. When you combine those concerns with Michael Kors' 30-plus forward P/E, it's tough to disagree with Citigroup's cautious stance. 

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Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Fossil and Michael Kors Holdings. 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.

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