Brokers Suggest Investing in Hasbro (HAS): Read This Before Placing a Bet

Core Viewpoint - The article discusses the reliability of Wall Street analysts' recommendations, particularly focusing on Hasbro (HAS), and emphasizes the importance of using these recommendations in conjunction with other research tools like the Zacks Rank [1][4]. Group 1: Brokerage Recommendations - Hasbro has an average brokerage recommendation (ABR) of 1.59, indicating a consensus between Strong Buy and Buy, based on 11 brokerage firms [2]. - Of the 11 recommendations, seven are Strong Buy and one is Buy, which accounts for 63.6% and 9.1% of all recommendations respectively [2]. - Despite the positive ABR, relying solely on this information for investment decisions may not be advisable, as studies show brokerage recommendations often lack success in guiding investors towards stocks with high price appreciation potential [4]. Group 2: Analyst Bias and Limitations - Brokerage analysts tend to exhibit a strong positive bias in their ratings due to vested interests, with five "Strong Buy" recommendations for every "Strong Sell" [5]. - This bias leads to a misalignment of interests between brokerage firms and retail investors, often misleading rather than guiding them [6][9]. - 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 the ABR [7][10]. Group 3: Zacks Rank vs. ABR - The Zacks Rank is a quantitative model that utilizes earnings estimate revisions and is displayed in whole numbers, contrasting with the ABR which is calculated from brokerage recommendations and shown with decimals [8]. - The Zacks Rank is updated more frequently, reflecting timely changes in earnings estimates, while the ABR may not be current [11]. - For Hasbro, the Zacks Consensus Estimate for the current year remains unchanged at $3.93, indicating steady analyst views on the company's earnings prospects [12]. Group 4: Investment Outlook for Hasbro - The recent consensus estimate changes and other factors have resulted in a Zacks Rank 3 (Hold) for Hasbro, suggesting caution despite the Buy-equivalent ABR [13].