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 Freeport-McMoRan Copper & Gold (NYSE:FCX) slipped slightly this morning after FBR Capital downgraded the mining giant from outperform to market perform.

So what: Along with the downgrade, analyst Mitesh Thakkar planted a price target of $40 on the stock, representing just 12% worth of upside to yesterday's close. While momentum investors might be attracted to Freeport's share-price strength over the past six months, Thakkar believes the company's prospects are largely already baked into the valuation.

Now what: According to FBR, Freeport's risk/reward trade-off is pretty balanced at this point. "[W]e believe the company has closed the majority of its valuation gap, upside potential from the possible divestiture of certain oil and gas assets into an MLP now seems limited, and widening oil differentials might affect the realizations," Thakkar said. "While investors are excited at the possibility of an MLP of California oil and gas assets, we believe that the proceeds ($5.3 billion to $6.0 billion) may not be enough to support expanded valuation and giving up the diversified exposure, which was one of the rationales for the acquisition." When you couple that seemingly limited upside with the stock's already volatile nature, waiting for a wider margin of safety certainly seems prudent.

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Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. 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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