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Why Masco Corporation Shares Will Fly to $25

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 Masco Corporation (NYSE: MAS  ) gained about 1% today after Jefferies upgraded the home improvement products distributor from hold to buy.

So what: Along with the upgrade, analyst Philip Ng raised his price target to $25 from $23, representing about 21% worth of upside to yesterday's close. So, while momentum traders might be turned off by Masco's price weakness in recent months, Ng's call could reflect a sense on Wall Street that its long-term-growth prospects are becoming too cheap to pass up.

Now what: According to Jefferies, Masco's risk to reward trade-off is rather attractive at this point. "We hosted a field trip to Masco's HQ this week and walked away more confident that the long-term strategy should position the company to outperform the market and the underlying recovery has not materially changed," said Ng. When you couple that upbeat outlook with Masco's recent pullback -- now trading at a cheapish PEG of 0.6 -- it's tough to disagree with Jefferies' upgrade.   

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Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

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Related Tickers

9/2/2015 4:01 PM
MAS $26.20 Up +0.56 +2.18%
Masco Corp CAPS Rating: ***