A sell-side analyst works for a brokerage to compose reports and forecast the markets for their clients. They typically focus on a specific industry and produce regular reports containing predictions on commodity prices and expected performance for a stock.
Main Street investors benefit from sell-side analyst reports since seasoned experts typically write them. Better yet, sell-side research as a whole outperforms (link opens PDF) that of buy-side. Investors place their faith in sell-side ratings because the reports are not tailored for a specific client, but to all the clients of the brokerage. The analyst and the firm's reputation can stand on the line with each "buy," "sell," or "hold" rating.
But be warned, every report produced by a sell-side analyst is called a "blanket recommendation" because they do not take into account the wants and needs of every individual. Investors must therefore determine if they are applicable to their own portfolio.
And don't forget, the analyst is paid by the brokerage, not the clients themselves, so the report could be part of an agenda of the firm that you don't know about. So remember to measure twice and cut once because their reports do not necessarily provide proper advice for an individual investor.
Business section: Investing ideas
We gathered the sell-side analyst ratings from reputable firms including Argus, Barclays, Canaccord Genuity, Collins Stewart, Deutsche, Needham, Oppenheimer, Robert W Baird, UBS, and Wedbush.
We then screened for the stocks that had "buy," "outperform," or "overweight" ratings from at least three of those names. Eleven stocks made the cut. We list them below.
What do you think? Are sell-side analysts making the right call with these names? (Click here to access free, interactive tools to analyze these ideas.)
List by Rebecca Lipman:
1. Aegerion Pharmaceuticals: Engages in the development and commercialization of novel therapeutics to treat severe lipid disorders. Market cap at $301.31M, most recent closing price at $14.41. On 11/09/2011, Deutsche Bank had a Buy rating on the stock. On 05/22/2012, Needham had a Buy rating on the stock. On 03/26/2012, Canaccord Genuity had a Buy rating on the stock.
2. Allstate: Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap at $16.25B, most recent closing price at $33.07. On 12/02/2011, Deutsche Bank had a Buy rating on the stock. On 08/10/2011, UBS had a Buy rating on the stock. On 03/05/2012, Argus had a Buy rating on the stock.
3. Alexion Pharmaceuticals: Engages in the discovery, development, and commercialization of biologic therapeutic products in the United States, Europe, Latin America, Japan, and the Asia Pacific. Market cap at $16.83B, most recent closing price at $87.60. On 12/09/2011, Barclays Capital had an Overweight rating on the stock. On 03/26/2012, Canaccord Genuity had a Buy rating on the stock. On 02/23/2012, UBS had a Buy rating on the stock. On 02/10/2012, Robert W. Baird had an Outperform rating on the stock.
4. Biogen Idec: Develops, manufactures, and markets therapeutics in the areas of neurology, immunology, hemophilia, and oncology in the United States and internationally. Market cap at $30.36B, most recent closing price at $126.73. On 12/09/2011, Barclays Capital had an Overweight rating on the stock. On 09/09/2011, UBS had a Buy rating on the stock. On 08/18/2011, Oppenheimer had an Outperform rating on the stock. On 06/21/2011, Deutsche Bank had a Buy rating on the stock.
7. Cisco Systems
8. Cognizant Technology Solutions: Provides information technology consulting and technology services in North America, Europe, and Asia. Market cap at $17.33B, most recent closing price at $56.90. On 10/07/2011, Deutsche Bank had a Buy rating on the stock. On 05/08/2012, Robert W. Baird had a Outperform rating on the stock. On 05/07/2012, Needham had a Buy rating on the stock.
10. Ardea Biosciences: Focuses on the discovery and development of small-molecule therapeutics for the treatment of gout and cancer in the United States. Market cap at $1.18B, most recent closing price at $31.90. On 04/12/2012, UBS had a Buy rating on the stock. On 03/26/2012, Canaccord Genuity had a Buy rating on the stock. On 01/19/2012, Collins Stewart had a Buy rating on the stock.
11. Under Armour
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's by Ryan Horch. and Rebecca Lipman do not own any of the shares mentioned above. Ratings sources from Reuters
The Motley Fool owns shares of LinkedIn, Cisco Systems, salesforce.com, and Under Armour. Motley Fool newsletter services have recommended buying shares of LinkedIn, salesforce.com, and Under Armour. Motley Fool newsletter services have recommended creating a bear put spread position in salesforce.com. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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