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 Juniper Networks (JNPR +0.00%) climbed 5% today after MKM Partners upgraded the networking products company from neutral to buy.
So what: Along with the upgrade, analyst Michael Genovese raised his price target to $26 (from $24), representing 30% worth of upside to yesterday's close. The stock has been on a roller coaster in 2013 on weak spending by telecom companies, but Genovese thinks that the volatility provides investors with a solid buy-in opportunity given his expectation for a rebound in demand.
Now what: MKM raised its 2013 EPS forecast from $1.20 to $1.25, and its 2014 estimate from $1.37 to $1.48. "The company's Service Provider (65% of revenues) results appear poised to meaningfully accelerate driven by renewed growth in the Core Router/Switch market and share gains via newer products like T4000 and PTX," noted MKM. "Based on our checks we expect the Core Router/Switch market to return to mid-to-high single digit y/y growth starting in 2H13." Of course, with Juniper shares trading at a P/E of 35, I'd wait for a wider margin of safety in case demand doesn't rebound as quickly as MKM expects.
