From the AFR:
…18 brokers recommend buying the stock while just one, Goldman Sachs, think clients should sell it…
…Rio Tinto has 15 brokers calling the stock a buy, while just five have a ‘hold’ rating and no broker thinks it’s an outright sell.
Atlas Iron…only [has] one broker suggests reducing exposure to the stock while 13 believe it’s a buy and eight have a recommendation of hold.
…CIMB has a sell recommendation on [Arrium] with four others calling it a buy.
All smashed this year. It’s not quite as bad as being made out. JP Morgan and Citi only recently upgraded their calls. Credit Suisse is one that has baffled me. Their iron ore analysis has been excellent yet the equities implications passed them by. There are probably others that did better too.
One thing retail clients should always remember about broker research is that it targets wholesale money and because fund manager bonuses are linked to relative performance not absolute returns they can do very nicely if they outperform the index, even if that means their returns fall.
So, in a falling market, broker research can sometimes be about picking the best loser so that the client can win. Though that excuse doesn’t cut it this time and never does for retail clients.
