Wall Street Analysts Think Synchronoss (SNCR) Is a Good Investment: Is It?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Synchronoss (SNCR), and suggests that while the average brokerage recommendation indicates a buy, investors should be cautious and validate this with other analysis tools like the Zacks Rank [1][3][12]. Brokerage Recommendations - Synchronoss has an average brokerage recommendation (ABR) of 1.67, which is between Strong Buy and Buy, based on recommendations from three brokerage firms, with 66.7% of these being Strong Buy [2]. - Despite the positive ABR, studies indicate that brokerage recommendations often do not effectively guide investors towards stocks with the highest potential for price appreciation [3][4]. Analyst Bias - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, with a ratio of five "Strong Buy" recommendations for every "Strong Sell" [4][8]. - This bias suggests that the interests of brokerage firms may not align with those of retail investors, leading to a lack of reliable insight into future stock price movements [5]. Zacks Rank Comparison - The Zacks Rank, which classifies stocks from 1 (Strong Buy) to 5 (Strong Sell), is based on earnings estimate revisions and is considered a more reliable indicator of near-term price performance compared to ABR [6][9]. - The Zacks Rank is updated more frequently and reflects timely changes in earnings estimates, unlike the potentially outdated ABR [10]. Current Earnings Estimates - For Synchronoss, the Zacks Consensus Estimate for the current year remains unchanged at $1.19, indicating steady analyst views on the company's earnings prospects [11]. - The unchanged consensus estimate has resulted in a Zacks Rank of 3 (Hold) for Synchronoss, suggesting caution despite the Buy-equivalent ABR [12].