While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of SolarCity Corp (NASDAQ:SCTY) slipped 1% today after JPMorgan downgraded the solar energy systems company from Overweight to Neutral.
So what: Along with the downgrade, analyst Paul Coster maintained his price target of $68, representing about 10% worth of downside to Friday's close. While momentum traders might be attracted to SolarCity's red-hot stock price, Coster believes that Wall Street might be overlooking some of the headwinds working against the company.
Now what: According to JPMorgan, SolarCity's risk/reward trade-off is pretty balanced at this point. "We believe that fundamentals remain constructive; the firm is doing an excellent job of reducing the cost of finance, expanding market reach, and increasing efficiency; however, at this price level some of the exogenous risks come into focus, including rising interest rates, competition, and growing opposition to distributed solar from utilities," noted Coster. Of course, when you consider just how juicy SolarCity's long-term growth prospects seem to be, I wouldn't be so quick to take too much off the table.
Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. 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.
More from The Motley Fool
What's Juno Therapeutics Worth to Celgene?
Celgene may be considering a multibillion-dollar bid to acquire Juno.
PTC Inc. (PTC) Q1 2018 Earnings Conference Call Transcript
PTC earnings call for the period ending December 31, 2017.
Why Ascena Retail Group Inc. Stock Plunged 62% in 2017
The parent company of maurices just finished a tough year. Here's what investors need to know.