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 Progenics Pharmaceuticals (NASDAQ: PGNX ) were up this morning after Needham & Company upgraded the biotechnology company to buy from hold.
So what: Along with the upgrade, analyst Chad Messer, Ph.D. planted a price target of $8 on the stock, representing about 67% worth of upside to Friday's close. While investors might be turned off by last week's bit of very bad news -- an abstract revealed the death of two patients during mid-stage trials of its experimental prostate cancer antibody-drug conjugate, PSMA-ADC -- Messer thinks that Progenics is too juicy to pass up given the positive data it presented at the American Society of Clinical Oncology GU Cancers Symposium.
Now what: According to Needham, Progenics' risk/reward trade-off is pretty attractive at this point. "Progenics presented positive data from two Phase II studies at ASCO-GU, including one from a PSMA-ADC therapeutics agent and a PSMA imaging agent," Messer noted. "We believe that these data validate the company's strategy of refocusing resources on cancer and making a big investment in the novel prostate cancer target PSMA. In particular, we believe the imaging agent could progress rapidly into Phase III testing and become a near-term value driver for PGNX shares." So while PSMA's toxicity concerns make Progenics far too risky for average investors, biotech-savvy contrarians might want to take a closer look at Needham's turnaround call.
The top stock in 2014
There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.