Long gone are the days when the analyst could get by with upgrading a few Internet stocks in the morning, and spending the balance of the day on TV chat shows proclaiming that bricks-and-mortar establishments are not long for this world.
It turns out, the analysts who did that were right. The bricks-and-mortar establishments -- mostly those owned by the clients of analysts who went all-in on Internet stocks -- did disappear in great numbers, as predicted.
Now stock analysts have it really tough. The markets are swinging so wildly, so quickly, that stock analysts -- judging by their stock ratings and price targets -- don't seem to be keeping up.
How can a stock that's a Buy at $15 still be a Buy at $8? And what is the difference between Buy and Accumulate? Don't you end up owning shares in both cases?
I think some of this could be the fault of poor stock rating systems. These analysts seem to have lost a step because their tools are outdated. For instance, what good is it to know if a stock will Outperform the market, when the market itself is acting like a chicken on cocaine?
I think a less rigid, more conversational, rating system is in order and I've made one up on the spot, as you'll see below:
Table 1: Reality Stock Ratings
|Company||Analysts' Consensus Recommendation*||Analysts' Consensus Price Target*||Philter Recommendation**||Philter Price Target**|
|Alcatel-Lucent||Hold||� 2.50||Hold (Onto Your Backside With Both Hands).||2.5 Croissants|
|Ciena||Hold||$8.50||Drink. A Lot. Then Sell.||Somewhere between $0 and $145|
|Nortel||Hold||$1.70||Sell. Then Move. Then Fake an Accent and Pretend You're Someone Else Entirely.||($5.71)|
|Tellabs||Outperform||$4.84||Buy. Then Hold. But Sell Before The Market Closes.||Somewhere between $0 and $150|
While my rating system has many flaws, I think it comes a little closer to making sense at a time when very few people can afford chicken or cocaine.
— Phil Harvey, Editor, Light Reading