Please ensure Javascript is enabled for purposes of website accessibility

Why Rexnord Corp.'s Shares Popped 13% Today

By Travis Hoium – Oct 24, 2016 at 12:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst upgrade helped push shares of Rexnord Corp. higher today.

Image source: Getty Images.

What happened 

Shares of industrial supplier Rexnord Corp. (ZWS 2.45%) jumped as much as 13.1% on Monday after being upgraded by a Wall Street analyst. At 11:30 a.m. EDT, shares had fallen slightly to an 8.4% gain on the day. 

So what

Barclays analyst Scott Davis upgraded Rexnord's shares from equal weight to overweight and raised his price target from $20 to $26 per share. This was part of a number of upgrades on the thesis that companies serving multiple industries are underappreciated by the market and have significant upside, bolstered by the theory that currencies in emerging markets will start to recover and help sales in coming quarters. 

Now what

Analyst upgrades and downgrades can often move a stock in the short term, but they have little to no impact on market performance in the long term. In fact, analysts typically underperform the market and are even compensated based more on things like access to management than how well they pick stocks. Keep that in mind when you see a stock like Rexnord pop on an analyst recommendation. Usually, it shouldn't be a reason to change your investment thesis and I think this pop is a great example of that. 

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.