Story updated at 9:50 a.m. to reflect market activity.
Catamaran stock gained 1.1% to $39.89 in morning trading.
The firm set a price target of $50 on the software company, saying the upgrade is a valuation call.
"We have long been concerned that the shares' valuation embedded an aggressive growth profile and the multiple would compress toward the mature multiple afforded mature PBMs," analyst Bret Jones wrote. "However, the recent volatility accelerated the compression much quicker than we anticipated. We believe the market has overshot, primarily because of stale service concerns and skittishness over 1Q14. While service issues exist for all PBMs, our PBM consultants have not noted an uptick in service issues related to contract starts. We are lowering our 1Q EPS estimate, but are still slightly above consensus and do not view consensus at risk. We are establishing a price target of $50."
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Separately, TheStreet Ratings team rates CATAMARAN CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CATAMARAN CORP (CTRX) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."