The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Nu Holdings Ltd. (NU) .Nu currently has an average brokerage reco ...

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].

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].