TSM - Is It Worth Investing in TSMC Based on Wall Street's Bullish Views? | Benzinga
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?
Let's take a look at what these Wall Street heavyweights have to say about TSMC (NYSE: TSM) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
TSMC currently has an average brokerage recommendation of 1.30, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 10 brokerage firms. An ABR of 1.30 approximates between Strong Buy and Buy.
Of the 10 recommendations that derive the current ABR, eight are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 80% and 10% of all recommendations.
Brokerage Recommendation Trends for TSM
The ABR suggests buying TSMC, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.
Do you wonder why? As a result ...