When you build a portfolio that includes stocks it's very likely that you will encounter a move higher or lower that you just didn't expect. Sometimes it happens because Wall Street analysts upgrade or downgrade a stock for various reasons. Now, when a stock is upgraded most investors don't really pay much attention and just enjoy the ride, but when a stock is downgraded that's when people usually get upset. If you are an investor in a stock and it gets downgraded should you be worried?
Analysts on Wall Street focus in on particular sectors and sometimes all the way down to individual stocks. They analyze every aspect of the industry and the companies inside of it. They meet with these companies and get a chance to ask questions ahead of the rest of the world and from there they form an estimate of how the company will do going forward. They do this by estimating earnings per share, sales per store, and other metrics that are relative to that industry. Once they formulate their opinion they issue a rating on the stock. Buy, hold, outperform, etc. Now when one analyst downgrades a stock it usually means that they have lowered their expectations for the stock and have a new price target in mind. If only one is downgrading then it's not always a big deal. If others have already lowered and now another is joining them this can be a problem.
First ask yourself why you invested in the stock. If you are investing in Snap
But what about a stock like JC Penny's
The bottom line is that analysts are highly trained and do get a clear look at particular companies but unless you are following analyst recommendations then you have your own reasons for your position. Unless that changes then stick to your guns.