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 Williams Companies (NYSE:WMB) sank 2% on Thursday after Jefferies downgraded the natural gas pipeline company, as well as its subsidiary Williams Partners L.P. (NYSE:WPZ), from buy to hold.

So what: Along with the downgrade, analyst Christopher Sighinolfi lowered his price target for Williams and Williams Partners to $44 and $52, respectively, representing relatively limited upside for both stocks going forward. So while momentum traders might be attracted to Williams' strength in recent months, Sighinolfi's call suggests growing sentiment on Wall Street that its valuation is becoming a bit stretched.

Now what: According to Jefferies, the risk/reward trade-off for Williams and, in turn, Williams Partners, is pretty balanced at this point. "WMB shares are up ~20% since mid-Dec. when two large passive investors announced plans to pursue activist measures," noted Sighinolfi. "However, as WMB's challenges remain largely operational (low frac spreads, Geismar outage, persistent NE setbacks), we do not see a quick fix. Without obvious corrective solutions, an adverse commodity environment, and an expectation for results to fall short of guidance, we are downgrading WMB & WPZ to Hold." When you couple those headwinds with the speculative nature of Williams' recent price run, it's tough to disagree with Jefferies' cautious stance. 

Brian Pacampara and The Motley Fool have no position in any stocks mentioned. 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.