PEP - Wall Street Bulls Look Optimistic About PepsiCo: Should You Buy? | 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?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about PepsiCo (NASDAQ: PEP).
PepsiCo currently has an average brokerage recommendation of 1.89, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 18 brokerage firms. An ABR of 1.89 approximates between Strong Buy and Buy.
Of the 18 recommendations that derive the current ABR, 10 are Strong Buy, representing 55.6% of all recommendations.
While the ABR calls for buying PepsiCo, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to ...