Wall Street Analysts Think OneSpan (OSPN) Is a Good Investment: Is It?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on OneSpan (OSPN), and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][10]. Group 1: Brokerage Recommendations - OneSpan has an average brokerage recommendation (ABR) of 2.00, indicating a "Buy" on a scale from 1 (Strong Buy) to 5 (Strong Sell) [2]. - Of the four recommendations contributing to the ABR, two are classified as "Strong Buy," accounting for 50% of the total recommendations [2]. Group 2: Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations have limited success in guiding investors toward stocks with the highest price increase potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings due to vested interests, often issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. Group 3: Zacks Rank vs. ABR - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from 1 (Strong Buy) to 5 (Strong Sell) and is based on earnings estimate revisions, making it a more effective indicator of near-term stock price performance [8][11]. - Unlike the ABR, which is based solely on brokerage recommendations and may not be up-to-date, the Zacks Rank reflects timely changes in earnings estimates [12]. Group 4: OneSpan's Current Position - The Zacks Consensus Estimate for OneSpan remains unchanged at $1.45 for the current year, suggesting steady analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, OneSpan holds a Zacks Rank of 3 (Hold), indicating caution despite the Buy-equivalent ABR [14].