Why Allot Communications' Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Allot Communications fell 12% today after the stock was downgraded by an analyst.

So what: Wunderlich's analysts were the culprits today, downgrading the stock to a hold rating from a buy rating. The firm cut its price target to $21 from $27, citing a lull in expected growth in the middle of next year.

Now what: The market often reacts in a knee-jerk fashion to downgrades like this, so that's why the stock is down so much today. The $21 price target was probably alarming since it's close to the price shares closed at yesterday. This shouldn't change your thesis completely, but keep the analyst's concerns in mind as a point to look for in coming quarters.

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The article Why Allot Communications' Shares Dropped originally appeared on Fool.com.

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