Should You Invest in Schlumberger (SLB) Based on Bullish Wall Street Views?

Core Viewpoint - The article discusses the reliability of Wall Street analysts' recommendations, particularly focusing on Schlumberger (SLB), and emphasizes the importance of using these recommendations in conjunction with other research tools like the Zacks Rank. Group 1: Brokerage Recommendations - Schlumberger has an average brokerage recommendation (ABR) of 1.40, indicating a consensus between Strong Buy and Buy based on 25 brokerage firms' recommendations [2] - Out of the 25 recommendations, 18 are Strong Buy and 4 are Buy, which represent 72% and 16% of all recommendations respectively [2] - Despite the positive ABR, it is cautioned that investors should not rely solely on this information for investment decisions, as studies show limited success of brokerage recommendations in predicting stock price increases [5][10] Group 2: Analyst Bias and Zacks Rank - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, with five "Strong Buy" recommendations for every "Strong Sell" [6] - 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 [8][11] - The Zacks Rank is distinct from ABR, as it is a quantitative model that reflects timely earnings estimate revisions, while ABR may not always be up-to-date [9][13] Group 3: Earnings Estimates and Investment Outlook - The Zacks Consensus Estimate for Schlumberger has declined by 1.5% over the past month to $3.04, indicating growing pessimism among analysts regarding the company's earnings prospects [14] - This decline in earnings estimates has resulted in a Zacks Rank of 4 (Sell) for Schlumberger, suggesting caution despite the Buy-equivalent ABR [15]