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 0.37%) rallied more than 2% in premarket trading Wednesday after Wells Fargo upgraded the networking equipment company from market perform to outperform.
So what: Along with the upgrade, analyst Jess Rubert boosted her price target range from $28-30 to $30-32, representing as much as 23.5% worth of upside to yesterday's close. So while contrarians might be turned off by the stock's strength over the past several months, Rubert's call suggests that the carrier trends working in Juniper's favor give it plenty of room to run.
Now what: Wells raised its 2014 EPS outlook for Juniper from $1.54 to $1.62 and its 2015 view from $2.00 to $2.10. "We are upgrading shares of Juniper to Outperform from Market Perform following a recent meeting with new CEO, Shaygan Kheradpir, which strengthened our belief that the company maintains the right products and strategy to capitalize on what appears to be a strong carrier spending environment entering 2014," said Lubert. "We believe carrier tailwinds should offset potential disruptions as Juniper positions the company's switching and security businesses to capitalize on high growth cloud and data center opportunities." With the stock up about 70% from its 52-week lows and sporting a P/E of 30, however, I'd wait for a wider margin of safety before betting on it.