Prior to making investment decisions, investors often seek guidance from Wall Street analysts. However, the reliability of brokerage recommendations and their impact on stock prices may be questionable. Let’s delve into the opinions of these influential analysts regarding Micron (MU) and discuss how to effectively utilize their recommendations.
Micron currently holds an average brokerage recommendation (ABR) of 1.57, on a scale of 1 to 5 (Strong Buy to Strong Sell). This ABR is calculated based on the recommendations of 27 brokerage firms. Approximately 70.4% of all recommendations are Strong Buy, while 7.4% are Buy.
Brokerage Recommendation Trends for MU
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Although the ABR suggests buying Micron, it is unwise to base investment decisions solely on this information. Research indicates that brokerage recommendations have shown limited success in predicting stocks with high price increase potential. This is often due to the positive bias of analysts towards stocks they cover, resulting from the vested interest of their respective brokerage firms. It is therefore recommended to use this information to supplement your own analysis or rely on more effective tools for predicting stock price movements.
The Zacks Rank, a proprietary stock rating tool with a proven track record, categorizes stocks into five groups ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell). The ABR can be used to validate the Zacks Rank for making profitable investment decisions.
ABR Should Not Be Confused With Zacks Rank
Although both ABR and Zacks Rank are displayed on a scale of 1-5, they are distinct measures. The ABR is calculated solely from broker recommendations and is typically displayed in decimals. On the other hand, the Zacks Rank is a quantitative model that utilizes earnings estimate revisions for evaluating stocks and is displayed in whole numbers.
Brokerage analysts have a tendency to be overly optimistic with their recommendations due to the vested interests of their firms. Consequently, their ratings often mislead investors. In contrast, the Zacks Rank is based on earnings estimate revisions, which have been shown to strongly correlate with near-term stock price movements.
Another difference between ABR and Zacks Rank is the freshness of the data. While the ABR may not always be up-to-date, the Zacks Rank quickly reflects earnings estimate revisions, providing timely indications of future price movements.
Is Micron (MU) Worth Investing In?
Considering the earnings estimate revisions for Micron, the Zacks Consensus Estimate for the current year remains unchanged at -$4.56 over the past month. Analysts’ consistent views on the company’s earnings prospects, as evidenced by an unchanged consensus estimate, suggest that the stock may perform in line with the broader market in the near term. The recent change in consensus estimate has resulted in a Zacks Rank #3 (Hold) for Micron.
[See the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here>>>>](https://www.zacks.com/stocks/buy-list/?adid=ZCOM_ZP_ARTCAT_FUNDAMENTALANALYSIS_573_090423&icid=blog-fundamental_analysis%7Caverage_broker_rating-ARTCAT%7C090423-ZP-commentary_blog-text-eoac)
Given the variables at play, it is advisable to exercise caution when considering the Buy-equivalent ABR for Micron.