Even though stock research is based on numbers
and facts, the quality of the analysis depends upon the skill
and the experience of the analyst. So you shouldn’t be surprised
if you find that recommendations and reasoning vary from one analyst
to the next.
Consensus
You may also want to look at reports that
include analyst consensus, which compiles ratings and
estimates from all the analysts following a particular stock and
compares the entire universe of analysts following a stock with
the views of independent analysts alone. By comparing a single
analyst’s opinion to the field of opinion, you can determine
how mainstream it is.
You may also use the consensus numbers as
a recommendation in themselves: Which rating gets the most votes?
Or you could examine the spread and determine whether there is
a generally uniform opinion or if they vary widely. If there's
a wide spread of opinion, the company may be going through controversial
changes, and you may want to read two drastically different opinions
before you make up your own mind.
Sam Stovall,
Chief Investment Strategist at Standard & Poor’s
Contrariwise
The majority opinion has been wrong
before. Analysts are only human, and they too can
fall for positive or negative hype surrounding a stock.
They may also take the opinions of other analysts
into consideration as they prepare their reports.
And they may feel pressure to bring their opinions
into line with the majority, to avoid close scrutiny
or criticism. Since analysts too can be misled by
consensus, it's a good idea to review at least one
report that offers a point of view contrary to the
consensus opinion.
Sam Stovall, 