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 Fortinet (FTNT 0.28%) gained 2% this morning after Wedbush upgraded the network security technologist from neutral to outperform.
So what: Along with the upgrade, analyst Rohit Chopra raised his price target on the stock to $24, representing about 13% worth of upside to yesterday's close. While contrarians might be turned off by Fortinet's sharp rebound in recent months, Chopra believes there's more room to bounce given his forecast of reaccelerating sales in the second half of 2014.
Now what: According to Wedbush, Fortinet's risk/ reward trade-off is pretty tempting at this point. "[W]e are upgrading the stock for the following reasons," said Chopra in a report, "(1) we believe the recent CFO appointment is a positive, (2) we think estimates are achievable, (3) recent enhancements to channel program should drive sales in 2H14, and (4) the recent product cycle and additions to product portfolio offer a competitive and compelling solution." With Fortinet shares up about 20% over the past month alone and trading at a forward P/E of 40, however, I'd wait for a wider margin of safety before betting on it.
