Many investors are sceptical when it comes to analyst buy recommendations, but a recent study suggests the sell ratings may be more problematic. In the late 1990s, the study notes, US analysts feverishly issued buy ratings in order to curry favour with companies. Buy ratings exceeded sell ratings by a ratio of 39:1, prompting regulators to step in and force firms to disclose their buy:sell ratios. The problem, the study suggests, is many firms are putting little thought into their sell ratings. In other words, the sell ratings are often superficial and uninformative, a pretence to give the illusion of objectivity.

Source: The Irish Times December 22, 2020 05:48 UTC