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 Sigma Designs (NASDAQ:SIGM) popped 5% in pre-market trading Thursday after Needham upgraded the digital TV chip technologist from hold to buy.

So what: Along with the upgrade, analyst Quinn Bolton planted a price target of $5.50 on the stock, representing about 36% worth of upside to yesterday's close. So while momentum traders might be turned off by Sigma's year-to-date price weakness, Bolton's call could reflect a sense on Wall Street that the company's turnaround prospects are becoming too cheap to pass up.

Now what: According to Needham, Sigma's risk/reward trade-off is rather attractive at this point. "We expect stronger F2H15 revenue will largely be driven by the ramp of the company's 4K/UHD-capable SX6 SoC and FRCX frame rate converter solutions and the continued success of Z-Wave home control solutions," said Bolton. "With the company poised for a strong revenue ramp and a return to profitability in F2H15, we are upgrading SIGM shares to Buy from Hold." More important, with Sigma still boasting a rock-solid balance sheet and cheapish price-to-sales ratio of 0.7, the downside might be limited enough to bet on that upbeat outlook. 

Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.