Is Itron (ITRI) a Buy as Wall Street Analysts Look Optimistic?

Core Viewpoint - The article discusses the reliability of Wall Street analysts' recommendations, particularly focusing on Itron (ITRI), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like Zacks Rank for making informed investment decisions [1][5][10]. Group 1: Brokerage Recommendations - Itron has an average brokerage recommendation (ABR) of 1.30, indicating a consensus between Strong Buy and Buy, with 80% of recommendations being Strong Buy and 10% being Buy [2][14]. - The article suggests that relying solely on brokerage recommendations may not be wise, as studies indicate they often fail to guide investors effectively towards stocks with high potential for price appreciation [5][10]. Group 2: Analyst Bias and Limitations - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, with a ratio of five "Strong Buy" recommendations for every "Strong Sell" [6][10]. - The interests of brokerage firms may not align with those of retail investors, leading to a lack of insight into future stock price movements [7][10]. Group 3: Zacks Rank as a Tool - Zacks Rank categorizes stocks into five groups based on earnings estimate revisions, providing a more effective indicator of near-term stock price performance compared to ABR [8][11]. - The Zacks Rank is timely and reflects the latest earnings estimates, unlike the potentially outdated ABR [12]. Group 4: Itron's Earnings Estimates - The Zacks Consensus Estimate for Itron has increased by 11.7% over the past month to $5.89, indicating growing optimism among analysts regarding the company's earnings prospects [13]. - This increase in consensus estimates has contributed to Itron receiving a Zacks Rank 2 (Buy), suggesting a favorable outlook for the stock [14].