Why Zulily Inc. Shares Could Zoom to $50

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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 Zulily  gained 4.5% in premarket trading Wednesday after Goldman Sachs upgraded the online retailer from neutral to buy.

So what: Along with the upgrade, analyst Taposh Bari raised his price target to $50 (from $47), representing about 37% worth of upside to yesterday's close. So while momentum traders might be turned off by Zulily's sharp decline since late February, Bari's call could reflect a sense on Wall Street that its growth prospects are just too cheap to pass up.

Now what: According to Goldman, Zulily's risk/reward trade-off is rather attractive at this point. "With the stock off 46% from its February 28 peak on the back of sector multiple compression and its lock- up expiration, we see a good entry point as the company expands its merchandising, fulfillment, and marketing initiatives which we expect to drive higher-than-expected customer growth into 2015," said Bari. Given Goldman's solid call-making track record -- currently ranked in the top 15% of our CAPS community -- growth-oriented Fools might want to take a closer look at Zulily.

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The article Why Zulily Inc. Shares Could Zoom to $50 originally appeared on Fool.com.

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.

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