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 analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of FireEye (MNDT) popped 4% in this morning after Barclays upgraded the cybersecurity technologist from equalweight to overweight.
So what: Along with the upgrade, analyst Raimo Lenschow planted a price target of $40 on the stock, representing about 24% worth of upside to yesterday's close. So while momentum traders might be turned off by FireEye's sharp pullback in recent months, Lenschow's call could reflect a sense on Wall Street that the company's growth prospects are now too cheap to pass up.
Now what: According to Barclays, FireEye's risk/reward trade-off is rather attractive at this point. "FireEye continues to be one of the most disruptive technology names with its differentiated, virtual-machine based approach to security," said Lenschow. "We believe the recent pullback among high valuation stocks has created a more compelling buying opportunity for long term-investors and as such we are increasing our rating to OW but taking a more conservative approach with our price target and lowering to $40 (from $50), based on a CY15 EV/Sales of 10x." When you couple FireEye's beaten-down stock price with its cash-rich balance sheet, the downside certainly seems limited enough to bet on those prospects.
