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 Glu Mobile (NASDAQ: GLUU ) gained 3% this morning after Benchmark upgraded the mobile-game publisher from hold to buy.
So what: Along with the upgrade, analyst Mike Hickey planted a price target of $5.60 on the stock, representing about 26% worth of upside to yesterday's close. So while contrarian traders might be turned off by Glu Mobile's Android TV-related pop yesterday, Hickey's call could reflect a sense on Wall Street that mobile gaming trends give the stock plenty of room to run.
Now what: According to Benchmark, Glu Mobile's risk/reward trade-off is particularly attractive at this point. "In our view, management has renewed credibility, from recent product success, after a significant retooling of their development expertise," said Hickey. "The Company's product portfolio and subsequent financial performance should benefit from the rapidly expanding smartphone/tablet hardware device market and related consumer software ecosystem." With Glu Mobile continuing to boast a rock-solid balance sheet and shares that are still off more than 20% from their 52-week high, the downside might even be limited enough to bet on those prospects.
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