Stock investors often rely on the advice of Wall Street analysts when making investment decisions, but the accuracy and reliability of these recommendations can be questionable. However, before rushing to invest in Perion Network (PERI), it’s important to take a critical look at the bullish views from these analysts.
Bullish Brokerage Views on PERI
Perion Network currently boasts an average brokerage recommendation (ABR) of 1.83, signaling a consensus between Strong Buy and Buy among six brokerage firms. However, a closer inspection reveals that brokerage recommendations may not always align with the best investment choices.
While Wall Street analysts lean towards a positive bias in their ratings, independent research suggests that these recommendations may not always translate into profitable investments for retail investors.
A More Reliable Indicator
Instead of solely relying on brokerage recommendations, investors should consider utilizing the Zacks Rank, a tool that categorizes stocks based on their earnings estimate revisions. Unlike brokerage ratings, the Zacks Rank focuses on a quantitative model rather than subjective analyst opinions, offering a more dependable gauge of a stock’s potential performance.
Zacks Rank vs. ABR
It’s crucial to distinguish between the ABR and Zacks Rank. The ABR is influenced by brokerage recommendations, while the Zacks Rank is driven by empirical data on earnings estimate revisions, providing a more objective evaluation of a stock’s outlook.
The Cautionary Tale of PERI
The Zacks Consensus Estimate for Perion Network has remained stagnant at $3.27 for the current year, leading to a Zacks Rank #3 (Hold) for the stock. This suggests that caution may be warranted when interpreting the bullish ABR for PERI.
It’s clear that investors should approach brokerage recommendations with a healthy dose of skepticism and consider alternative indicators to make informed investment decisions.
Ultimately, it’s essential for investors to exercise critical thinking and conduct comprehensive research before succumbing to the allure of bullish brokerage ratings. By seeking guidance from reliable indicators like the Zacks Rank, investors can navigate the complex financial landscape with greater confidence.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.