Is It Worth Investing in ASML (ASML) Based on Wall Street's Bullish Views?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on ASML, and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][4][9]. Group 1: ASML Brokerage Recommendations - ASML has an average brokerage recommendation (ABR) of 1.50, indicating a consensus between Strong Buy and Buy, based on 24 brokerage firms [2]. - Out of the 24 recommendations, 18 are classified as Strong Buy, accounting for 75% of the total recommendations [2]. Group 2: Limitations of Brokerage Recommendations - The article suggests that relying solely on brokerage recommendations may not be wise, as studies indicate limited success in guiding investors towards stocks with the best price increase potential [4]. - Brokerage firms often exhibit a strong positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [5][9]. Group 3: Zacks Rank vs. ABR - The Zacks Rank, which is based on earnings estimate revisions, is presented as a more reliable indicator of a stock's near-term price performance compared to ABR [7][10]. - Unlike ABR, which may not be up-to-date, the Zacks Rank reflects timely changes in earnings estimates, making it a more accurate tool for predicting future price movements [11]. Group 4: ASML's Earnings Estimates - The Zacks Consensus Estimate for ASML has declined by 0.6% over the past month to $20.57, indicating growing pessimism among analysts regarding the company's earnings prospects [12]. - This decline in earnings estimates has resulted in a Zacks Rank of 4 (Sell) for ASML, suggesting caution despite the Buy-equivalent ABR [13].