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 analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of E*Trade Financial Corporation (NASDAQ: ETFC ) gained 1% on Friday after Barclays upgraded the discount brokerage from underweight to overweight.
So what: Along with the bullish call, analyst Sherri Scribner planted a price target of $40 on the stock, representing about 22% worth of upside to yesterday's close. So while momentum traders might be turned off by E*Trade's sharp pullback in recent weeks, Scribner's call could reflect a growing sense on Wall Street that the concerns surrounding its prospects are becoming a bit overblown.
Now what: According to Barclays, E*Trade 's risk/reward trade-off is rather attractive at this point. "For ETFC, relative to last year, we are incrementally positive on a story that contains far less operational risk, has displayed sustainably strong performance in its trading business, and has significantly improved its capital profile (providing it opportunity to further enhance earnings down the line)," said Hill. When you couple E*Trade's still-hefty debt load with its steep-ish forward P/E of 18, however, I'd wait for a much wider margin of safety before buying into that bullishness.
Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.