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.
What: Shares of Knight Capital Group (NYSE:KCG), a financial services and order routing company whose software glitch cost it $461.1 million in just 45 minutes, jumped as much as 21% after receiving an analyst upgrade amid speculation of a takeover.
So what: Analyst Niamh Alexander of research firm Keefe, Bruyette & Woods, upgraded Knight to "market perform" from "underperform" today, and boosted his firm's price target on the company to $2.60 from $2.25. Specifically, Alexander noted as the impetus for the upgrade a story in The Wall Street Journal over the weekend that cites two parties, Getco and Virtu Financial, that could be interested in purchasing Knight's recently maligned market-making division.
Now what: Now you calm down, because analyst upgrades and downgrades, as well as speculation, are rarely ever a good reason to chase a stock higher or lower. We know that Knight's dilutive cash raising plans were going to weigh down the stock for some time, and it's likely to be a few more quarters before we see Knight's business return to normal. I feel the company could be a very long-term turnaround candidate, but I wouldn't allow today's euphoria to take investors for a loop.
Craving more input? Start by adding Knight Capital Group to your free and personalized watchlist so you can keep up on the latest news with the company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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