Who Do You Trust?
You say “po-tae-tow,” I say “po-ta-tow.” You say “tow-mae-tow;” I say “tow-ma-tow.”
An accent is one thing, but how can two respected financial organizations come to such disparate conclusions? A look at the overview comments by each tells a fascinating story:
(Photo credit: Wikipedia)
Morgan Stanley, initiating coverage, says “Buy.” And Zacks, on the same day, with the same stock, says “Sell.”
Zacks:
- “Disappointing results and rising regulatory concerns”
- “Company has disappointed its investors in each of the last four quarters”
- “We would advise investors to stay away from this stock for the time being”
- “Longer-term recommendation of ‘Underperform'”
Morgan Stanley:
- “Regulatory concerns are overblown”
- “Compelling entry point”
- “Underappreciated growth opportunity”
- “Valuation does not reflect strong growth potential'”
Without mentioning the stock by name, since it is one of our clients, the recommendations just go to show how widely analysts can differ in their assessments of the same security, and how carefully investors should scrutinize recommendations when making investment decisions.
What happened to the stock on the day these opposing recommendations were issued? It went up.
— Roger Pondel, rpondel@pondel.com
