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 IMAX Corporation (NYSE: IMAX ) gained 2% this morning after Stifel Nicolaus upgraded the jumbo movie-screen technologist from hold to buy.
So what: Along with the upgrade, analyst Benjamin Mogil planted a price target of $32 on the stock, representing 30% worth of upside to Friday's close. So while contrarian traders might be turned off by IMAX's sharp pullback in recent weeks, Mogil's call could reflect a sense on Wall Street that its growth prospects are becoming too cheap to pass up.
Now what: According to Stifel, IMAX's risk/reward trade-off is rather attractive at this point. "This move comes as we view IMAX at a positive operational inflection point as we expect significant JRSA margin expansion leading to increased operating leverage and EBITDA per screen growth," said Mogil. "While the strong 2015 and 2016 box office slate will aid the entire group, we view IMAX as exceptionally well positioned given that the attractive slate for their core comes at a time when their operating fundamentals are improving." When you couple that upbeat outlook with IMAX's rock-solid balance sheet and recent price weakness, it's tough to disagree with Stifel's bullishness.
Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash cow. While Buffett shakes in his billionaire boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.