Wall Street Analysts See AngloGold Ashanti (AU) as a Buy: Should You Invest?

Core Viewpoint - The article discusses the reliability of Wall Street analysts' recommendations, particularly focusing on AngloGold Ashanti (AU), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank [1][5]. Brokerage Recommendations - AngloGold Ashanti has an average brokerage recommendation (ABR) of 1.50, indicating a consensus between Strong Buy and Buy, with 75% of recommendations being Strong Buy and 12.5% being Buy [2]. - The article highlights that while the ABR suggests buying, it should not be the sole basis for investment decisions due to the limited success of brokerage recommendations in predicting stock price increases [5][10]. Analyst Bias - Brokerage analysts tend to exhibit a strong positive bias in their ratings, often issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. - This bias indicates that analysts' interests may not align with those of retail investors, leading to potential misguidance [7][10]. Zacks Rank Comparison - The Zacks Rank is presented as a more reliable tool for predicting stock performance, categorizing stocks from Strong Buy to Strong Sell based on earnings estimate revisions [8][11]. - Unlike the ABR, the Zacks Rank is timely and reflects the latest earnings estimates, making it a more effective indicator of future stock prices [12]. Earnings Estimate Revisions - The Zacks Consensus Estimate for AngloGold Ashanti has increased by 9.2% over the past month to $5.8, indicating growing analyst optimism about the company's earnings prospects [13]. - This increase in consensus estimates, along with other factors, has resulted in a Zacks Rank 1 (Strong Buy) for AngloGold Ashanti, suggesting a potential for stock price appreciation [14].