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 (NYSE:JNPR) 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.
Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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.
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