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 BlackBerry (NYSE:BB) fell 3% on Thursday after Societe Generale downgraded the wireless solutions technologist from hold to sell.
So what: Along with the downgrade, analyst Andy Perkins reiterated his price target of $6.00, representing about 34% worth of downside to yesterday's close. So while momentum traders might be attracted to BlackBerry's rebounding share price in recent months, Perkins' call could reflect a growing sense on Bay Street that its valuation is becoming a bit stretched.
Now what: According to SocGen, BlackBerry's risk/reward trade-off is rather unattractive at this point. "The new handset (the Blackberry 'Jakarta') will launch in April and so will have no impact on the historical results," said Perkins. "Additionally, we forecast that Services revenues will also be down almost 13% sequentially as subscriber accounts continue to fall." Of course, with BlackBerry shares still off about 45% from their 52-week highs.
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.