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 Alcatel-Lucent (NYSE: ALU ) rallied 4% today after J.P. Morgan upgraded the networking equipment company from neutral to overweight.
So what: Along with the upgrade, analyst Sandeep Deshpande planted a price target of €3.30 on the stock, representing about 20% worth of upside to yesterday's close. So while momentum traders might be turned off by Alcatel's year-to-date price weakness, Deshpande's call could reflect a sense on Wall Street that the company's improvement prospects are becoming too cheap to pass up.
Now what: According to J.P. Morgan, Alcatel's risk/reward trade-off is rather attractive at this point. "It takes time to turn around a company that has not been successfully turned around since '06 M&A, hence our caution early in Alcatel's restructuring plan," said Deshpande. "With the restructuring proceeding at a faster pace than guided originally and the stock having pulled back because some investors have taken profits, not because progress has stalled, we upgrade the stock to Overweight (from Neutral)." Given J.P. Morgan's impressive stock-picking track record -- currently ranked in the top 10% of our CAPS community -- value-oriented Fools might want to take a closer look at Alcatel.
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!