Wall Street Analysts Think Itron (ITRI) Is a Good Investment: Is It?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Itron (ITRI), and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][4]. Group 1: Brokerage Recommendations - Itron has an average brokerage recommendation (ABR) of 1.46, indicating a consensus between Strong Buy and Buy, based on recommendations from 13 brokerage firms, with 10 of those being Strong Buy, representing 76.9% of all recommendations [2][4]. - The article suggests that relying solely on brokerage recommendations may not be a sound investment strategy, as studies indicate these recommendations often fail to guide investors effectively towards stocks with high price appreciation potential [4][9]. Group 2: Analyst Bias and Zacks Rank - Brokerage analysts tend to exhibit a strong positive bias in their ratings due to vested interests, with a ratio of five Strong Buy recommendations for every Strong Sell [5][9]. - The Zacks Rank, a proprietary stock rating tool, categorizes stocks based on earnings estimate revisions and has shown a strong correlation with near-term stock price movements, making it a more reliable indicator than ABR [7][10]. Group 3: Earnings Estimates for Itron - The Zacks Consensus Estimate for Itron has increased by 11.5% over the past month to $5.23, reflecting growing optimism among analysts regarding the company's earnings prospects [12]. - The recent change in the consensus estimate, along with other factors, has resulted in a Zacks Rank 2 (Buy) for Itron, suggesting that the Buy-equivalent ABR may serve as a useful guide for investors [13].