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 Applied Materials (NASDAQ:AMAT) gained about 1% this morning after J.P. Morgan upgraded the chip-equipment giant from neutral to overweight.

So what: Along with the upgrade, analyst Harlan Sur boosted his price target to $30 (from $19), representing about 31% worth of upside to Thursday's close. So while contrarian traders might be turned off by Applied's price strength over the past year, Sur's call could reflect a sense on Wall Street that the company's growth prospects still aren't fully baked into the valuation.

Now what: According to J.P. Morgan, Applied's risk/reward trade-off is rather attractive at this point. "We are upgrading Applied Materials to Overweight (from Neutral) with a $30 Dec-2015 price target driven by its solid position in the semiconductor equipment market (deposition/etch/epi/implant), our continued positive outlook on the current Moore's Law–driven wafer equipment (WFE) spending cycle, and improving confidence in the successful completion of the merger with Tokyo Electron," said Sur. "Given a healthy WFE spending environment over the next few years, combined with cost synergies, we estimate AMAT/TEL can generate $1.90-$2.00/share of earning power by FY16." Of course, with Applied shares hitting a new 52-week high today and trading at a forward P/E of about 20, I'd hold out for a wider margin of safety before betting too heavily on that bullishness.  

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.