Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: Citi Investment Research upgraded the stock from hold to buy, and raised its price target to $24 from $16.50. The analyst explained that he sees an opportunity for the stock's growth, expectations are "fully reset," and the stock has a "rational" valuation.
Now what: Finisar stock fell from more than $43 at the end of February to $18.67 at yesterday's close, thanks to an earnings miss and disappointing outlook in March, followed by a disappointing update to guidance in June. What's more, my Foolish colleague Seth Jayson recently noted that Finisar's earnings aren't so hot. With EPS expected to fall 40% in the coming year, and a forward P/E ratio of 20.7 times, it seems hard to justify the current price unless earnings expectations are far too low.
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Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.