Wall Street Analysts Weigh in on Paypal (PYPL)
Paypal (PYPL) has been making headlines recently, with Wall Street analysts providing their recommendations on whether to buy, sell, or hold the stock. But do these recommendations truly hold weight? Let’s take a closer look at the current state of Paypal and how to use brokerage recommendations to your advantage.
According to the average brokerage recommendation (ABR) of 2.00, calculated from 37 brokerage firms, Paypal is a strong buy. Studies have shown that brokerage recommendations have limited success in predicting a stock’s future price movement. This is due to the inherent bias of these firms towards the stocks they cover, resulting in a strong positive bias in their ratings.
In contrast, our proprietary stock rating tool, the Zacks Rank, has a proven track record of accurately predicting stock price movements. With a range of 1 to 5, the Zacks Rank classifies stocks based on their earnings estimate revisions. This tool has been shown to be highly effective in predicting near-term price performance.
It’s important to note that the ABR and Zacks Rank are two different measures. While the ABR is solely based on brokerage recommendations, the Zacks Rank takes into account earnings estimate revisions.
Furthermore, the Zacks Rank is constantly updated to reflect the latest earnings estimate revisions, ensuring its freshness and accuracy. On the other hand, the ABR may not always be up-to-date.
While Wall Street analysts may have their own vested interests, the Zacks Rank provides a more objective and accurate assessment of a stock’s potential.
