TipRanks makes this possible for the everyday investor by organizing these updated ratings into an easy-to-read format. Some of the companies featured in this article fell short of analysts' estimates with poor earnings performances over the second quarter at times due to difficult comparisons against their incredibly strong first-quarter results.
Others, however, pulled through and reported uplifting developments. These now remain as, or have been newly assigned, buy ratings. Wall Street's best-performing analysts assigned these ratings due to the companies' potential for long-term upside. Positioned particularly well to handle the deceleration in e-commerce trends, Walmart recently reported quality earnings results.
The five-star analyst was pleased by Walmart's diversifying revenue streams, notably the acceleration in initiatives like Walmart Connect. He also noted that gains had been made across the grocery and general merchandise sectors. The back-to-school shopping season brings encouragement to Benedict, who stated that Walmart is "well-positioned regardless of the macro environment," for the second half of the year. Stimulus payments certainly aided Walmart's past earnings, and now the analyst argues that the business is continuing to accelerate forward.
TipRanks' unique data has placed Benedict as 34 out of over 7, analysts. As vaccination drives picked up steam in the first half of the year, so did the travel industry. Despite the company's particularly precarious position at the start of the pandemic, Airbnb was able to navigate the rough seas and is now sailing smoothly.
After another second-quarter earnings beat, Brian Fitzgerald of Wells Fargo has forecasted a strong second half ahead. The five-star analyst based his hypothesis on the fact that while long-term nonurban bookings have been the strongest niche for the company, it is now seeing shorter, more urban bookings rise.
The only way to judge the effectiveness of this research is to look into the company's track record, as it may present most of its successful tips and cover up the flops. After all, companies are in the business of selling a product, and advertising their best attributes is a way to promote these products. These types of firms typically sell research to either individuals or institutional investors. They are credited with what investors call " tear sheets " because, in the old paper days, you could tear out the page the stock was described on and keep it separately for fast references.
The main criticism for these large firms has always been that they can't physically devote the time needed to make judgment calls on stocks and that they tend to hire less-experienced analysts.
While some of that may be true, they do apply consistent models and scrutiny to the stocks they cover and are truly independent. They also have a legacy and their reputation to uphold, which promotes a good environment to produce independent research.
Sell-side analysts may also have a vested interest in the companies they are covering in the form of generating ideas for their clients or bringing attention to a company that they plan to hold or have business relationships with. Before the technology bubble , there were a number of sell-side analysts who were directly covering stocks in which the investment banking side of the business they worked for was bringing to the market.
Those analysts had not been following the " Chinese Wall " concept designed to keep research and investment banking separate.
While some of this activity still goes on, new regulatory and voluntary changes in the process have taken place, and there seems to be some improvement. Unfortunately, there will always be the potential for conflict. There seems to be no clear-cut solution to what type of analyst to follow. Recently, there have been significant changes to the way research is produced, and it will take time for the effects to take hold.
Still, if you look back over the history of the research process, the fundamentals have not changed. If you want to know what analyst to follow, you have to perform the same tests that stand time. Read the fine print, compare their calls to those of other analysts, find out how they are compensated, and look at their track record making sure to cover the great picks and their flops. The bottom line is, don't just take one analyst's word for it—they are only human.
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Investopedia does not include all offers available in the marketplace. Related Articles. Register as a student Register as an individual. Overview Included Materials. Details Pub Date: Nov 1, Discipline: International Business. Subjects: Fixed income securities International relations Stock markets. Source: Harvard Business Review. Length: 2 page s.
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