While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Sigma Designs (NASDAQ: SIGM ) popped 5% in pre-market trading Thursday after Needham upgraded the digital TV chip technologist from hold to buy.
So what: Along with the upgrade, analyst Quinn Bolton planted a price target of $5.50 on the stock, representing about 36% worth of upside to yesterday's close. So while momentum traders might be turned off by Sigma's year-to-date price weakness, Bolton's call could reflect a sense on Wall Street that the company's turnaround prospects are becoming too cheap to pass up.
Now what: According to Needham, Sigma's risk/reward trade-off is rather attractive at this point. "We expect stronger F2H15 revenue will largely be driven by the ramp of the company's 4K/UHD-capable SX6 SoC and FRCX frame rate converter solutions and the continued success of Z-Wave home control solutions," said Bolton. "With the company poised for a strong revenue ramp and a return to profitability in F2H15, we are upgrading SIGM shares to Buy from Hold." More important, with Sigma still boasting a rock-solid balance sheet and cheapish price-to-sales ratio of 0.7, the downside might be limited enough to bet on that upbeat outlook.
Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!