Recommendations and Target Prices
UNDERSTANDING BROKER RECOMMENDATIONS
STUPID QUESTION - How do brokers define their buy, hold, sell recommendations? It seems odd to have a target price 20-30% above market price and yet consider the stock a ‘hold’. For example, see today’s broker reviews of WOW – 3 brokers (GSJB Were, Citi, Macquarie) are recommending hold with targets 28.6%, 12% & 21% above market, whereas the broker (JP Morgan) recommending a buy has a target price only 11% above the current share price.
REPLY: It depends on the broker. They all have different definitions of what constitutes a recommendation, you have to go to the back of the research (see examples below). Some brokers are quite Robotic...Continue Reading