Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?Let's take a look at what these Wall Street heavyweights have to say about Viking Therapeutics, Inc. (VKTX) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.Viking Therapeutics curre ...

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Citigroup, and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][4][9]. Group 1: Brokerage Recommendations for Citigroup - Citigroup has an average brokerage recommendation (ABR) of 1.67, indicating a position between Strong Buy and Buy, based on recommendations from 21 brokerage firms [2]. - Out of the 21 recommendations, 13 are classified as Strong Buy (61.9%) and 2 as Buy (9.5%) [2]. Group 2: Limitations of Brokerage Recommendations - Relying solely on brokerage recommendations may not be advisable, as studies suggest they often fail to guide investors toward stocks with significant price appreciation potential [4]. - Brokerage analysts tend to exhibit a strong positive bias in their ratings due to vested interests, with a ratio of five Strong Buy recommendations for every Strong Sell [5][9]. Group 3: Zacks Rank as an Alternative - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, making it a more effective indicator of near-term stock performance [7][10]. - The Zacks Rank is updated more frequently than the ABR, reflecting timely changes in earnings estimates, which are crucial for predicting future stock prices [11]. Group 4: Citigroup's Earnings Estimates - The Zacks Consensus Estimate for Citigroup's earnings for the current year has remained unchanged at $7.53 over the past month, indicating analysts' optimism about the company's earnings prospects [12]. - The recent consensus estimate change, along with other factors, has led to a Zacks Rank of 1 (Strong Buy) for Citigroup, suggesting a favorable investment outlook [13].