Volstryt’s recommendations are often based on investors who decide to buy, sell or hold shares. Media reports of these mediation branded (or sales) analysts that change their ratings often affect the price of shares. Still, is it really important to them?
Let’s take a look at what these Wall Street heavyweights have to say UNITEDHEALTH GROUP (UNH) before discussing the reliability of the mediation recommendations and how to use them in your favor.
Currently, the UNITEDHEALTH average has a 1.74 mediation recommendations (ABR) with a scale of 1 to 5 (strong purchase strongly sold) based on actual recommendations (purchased, detained, sold, etc.) made by 25 brokerage firms. 1.74 ABR is approximately between a strong purchase and purchase.
Of the 25 recommendations that receive the current ABR, 15 are strong to buy and two buy. Strong buy and buy 60% and 8% of all recommendations respectively.
BROKER RINGS DIGHTMENT DIGHT UNH
Check the UNITEDHEALTH price and stock forecast here >>>
ABR offers to buy United, but make a decision to invest only on this information may not be a good idea. According to several studies, there are few mediation recommendations in the leadership of investors who would choose the highest increase in prices.
Are you wondering why? Due to the interest of brokerage companies, the positives of their analysts often have the positive bias of their analysts, assessing it. Our study shows that each “strong sales” recommendations are appointed by the mediation companies to five “strong purchase” recommendations.
In other words, their interests do not always meet retail investors, rarely stating where the share price could actually rise. Therefore, the best use of this information can be the approval of your own research or indicator, which has proven to be a very successful way to intend to move stock prices.
The Zacks Hand, our patented shares rating tool with an impressive external audited record, is divided into five groups, starting with Zacks rank no. 1 (Strong Buy) to Zacks rank no. 5 (Strong Sell) and is an effective stock price result indicator in the near future. As a result, the use of ABR for approval of the Zacks rank could be an effective way to make a profitable investment decision.
Although both Zacks and ABR are displayed in the 1-5 range, they are different measures.
The ABR is calculated only on the basis of mediation recommendations and is usually displayed in decimal decimals (example: 1.28). On the contrary, the Zacks rating is a quantitative model that allows investors to use the power of income review views. It is displayed in total numbers – 1 to 5.
The analysts employed by mediation firms were and continued to be too optimistic about their recommendations. Because these analysts are more favorable than their research support for their employers’ interest, they mislead investors much more often than they lead.
On the other hand, the basis of the Zacks rank is the earnings estimate. And empirical research shows a strong relationship between revenue assessment trends and the next period of change in stock prices.
In addition, the different degrees of Zacks are in proportion to all shares for which mediation analysts provide earnings estimate in the current year. In other words, at any time, this tool maintains a balance between the five ranks attributed to it.
Another important difference between ABR and Zacks rating is freshness. ABR is not necessarily modern when you look at it. However, as mediation analysts are constantly reviewing their income estimates to take into account the changing business trends of the company, and their actions are reflected in the Zacks Range, always indicating the future price change.
As far as UNITEDHEALT’s earnings estimate, the Zacks estimate estimated in the current year has fallen by 4.2% to $ 21.15 in the last month.
Analysts’ growing pessimism due to the prospects of the company’s earnings, as the strong agreement between them shows less EPS assessments, may be a legitimate reason why stocks can immerse themselves in the near future.
The recent changes in the estimate of the consensus, along with three other factors related to earnings, led to the rank of Zacks no. 4 (sell) United. Here you can see the whole Zacks rank no. 1 (Strong Buy) list here >>>>
Therefore, it may be wise to pick up the UNITEDHEALTH equivalent ABR with grain salt.
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UNITEDHEALTH GROUP INCORPORTED (UNH): Free Stock Analysis Report
This article was originally published on Zacks Investment Research (zacks.com).
