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 Patterson-UTI Energy (PTEN -0.60%) climbed 1% today after Goldman Sachs upgraded the drilling services provider from "sell" to "neutral".
So what: Along with the upgrade, analyst Waqar Syed boosted his price target to $25 (from $21.50), representing about 12% worth of upside to Friday's close. While momentum investors might be turned off by the stock's sluggish price action in 2013, Syed believes that the risk/reward trade-off is now decent given the likely increase in drilling activity next year.
Now what: Goldman thinks that that worst is probably over for Patterson. "Consensus 2014 EPS has been correcting and is now more in line with our estimates," Goldman wrote. "Finally, we are getting more positive on E&P spending on US land and expect it to increase 6% in 2014 and PTEN has high leverage to it." Of course, Patterson-UTI shares still sporting an industry-matching P/E of 15, I wouldn't expect to benefit too much from that forecasted pickup.
