Viking Therapeutics (VKTX) Is Considered a Good Investment by Brokers: Is That True?

Core Viewpoint - Brokerage recommendations, particularly for Viking Therapeutics, Inc. (VKTX), show a strong positive bias, but their reliability in guiding investment decisions is questionable [5][10][11]. Group 1: Brokerage Recommendations - Viking Therapeutics has an average brokerage recommendation (ABR) of 1.22, indicating a consensus between Strong Buy and Buy, based on 18 brokerage firms [2]. - Out of the 18 recommendations, 16 are classified as Strong Buy, accounting for 88.9% of the total recommendations [2]. Group 2: Limitations of Brokerage Recommendations - Relying solely on brokerage recommendations may not be advisable, as studies indicate they often fail to identify stocks with the highest potential for price appreciation [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [6][10]. - The ABR may not be up-to-date, while the Zacks Rank, which is based on earnings estimate revisions, provides a more timely and accurate reflection of stock price movements [13]. Group 3: Zacks Rank Comparison - The Zacks Rank categorizes stocks into five groups based on earnings estimate revisions, with a strong correlation to near-term stock price movements [8][11]. - Viking Therapeutics currently holds a Zacks Rank of 4 (Sell), reflecting a 27.4% decline in the Zacks Consensus Estimate for the current year to -$2.37, indicating growing pessimism among analysts [14][15].