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 Rambus (NASDAQ:RMBS) gained 3% on Friday after Benchmark initiated coverage on the technology company with a buy rating.
So what: Along with the bullish call, analyst Gary Mobley planted a price target of $16 on the stock, representing about 43% worth of upside to yesterday's close. So while contrarians might be turned off by Rambus' price strength in recent months, Mobley's call could reflect a growing sense on Wall Street that the company's prospects still aren't fully baked into the valuation.
Now what: According to Benchmark, Rambus' risk/reward tradeoff is rather attractive at this point. "Our investment thesis hinges on our belief Rambus will continue to forge deeper relationships with leading memory suppliers and system-on-chip companies," said Mobley. "In essence, we believe Rambus will continue to shed its reputation as a patent troll and will increasingly engage with customers as a collaborative design, IP company, similar to ARM Holdings." Of course, with the stock up about 100% from its 52-week lows and trading at a steep-ish forward P/E of 25, I'd wait for a wider margin of safety before betting on it.