Why SouFun Holdings Ltd. Shares Will Fly Above $15

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 SouFun Holdings  soared 7% Wednesday morning after Goldman Sachs upgraded the Chinese real estate Internet portal from neutral to buy.

So what: Along with the upgrade, analyst Fei Fang planted a price target of $16.20 on the stock, representing about 27% worth of upside to yesterday's close. So while momentum traders might be turned off by SouFun's particularly sharp pullback over the past month, Fang's call could reflect a growing sense on Wall Street that the company's prospects are now too cheap to pass up.


Now what: According to Goldman, SouFun's risk/reward trade-off is rather attractive at this point. "We upgrade SouFun to Buy from Neutral after the stock's 33% share price pullback from its Mar 6 high (vs. NASDAQ -7%) on weak property transaction volume and sectorwide de-rating," said Fang. "Trading at 12X 2015E P/E (vs. sector average 20X), we believe SouFun has transformed from being competitively challenged (especially in e-commerce) into one of the most defensive vertical leaders due to sustained strength in marketing and listing services, both of which benefit from structural offline-to-online tailwinds regardless of property cycles." Given SouFun's still-highly speculative nature, however, only the most risk-tolerant of Fools should consider buying into that bullishness. 

3 stocks poised to be multi-baggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

The article Why SouFun Holdings Ltd. Shares Will Fly Above $15 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.