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?\n\nBefore 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 Boston Scientific (BSX).\n\nBoston Scientific currently has an average brokerage recommendation (ABR) of 1.16, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 31 brokerage firms. An ABR of 1.16 approximates between Strong Buy and Buy.\n\nOf the 31 recommendations that derive the current ABR, 27 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 87.1% and 9.7% of all recommendations.\n\nBrokerage Recommendation Trends for BSX\n\nThe ABR suggests buying Boston Scientific, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.\n\nDo you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five \"Strong Buy\" recommendations for every \"Strong Sell\" recommendation.\n\nIn other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.\n\nWith an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.\n\nZacks Rank Should Not Be Confused With ABR\n\nAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.\n\nBroker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.\n\nAnalysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.\n\nOn the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.\n\nIn addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.\n\nThere is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.\n\nShould You Invest in BSX?\n\nLooking at the earnings estimate revisions for Boston Scientific, the Zacks Consensus Estimate for the current year has increased 2.1% over the past month to $2.98.\n\nAnalysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.\n\nThe size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Boston Scientific. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>\n\nTherefore, the Buy-equivalent ABR for Boston Scientific may serve as a useful guide for investors.\n\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\n\nBoston Scientific Corporation (BSX) : Free Stock Analysis Report\n\nThis article originally published on Zacks Investment Research (zacks.com).

Is It Worth Investing in Boston Scientific (BSX) Based on Wall Street's Bullish Views?

The article analyzes Boston Scientific's (BSX) stock performance, discussing brokerage recommendations and the reliability of Wall Street analysts' views. It highlights the company's average brokerage recommendation (ABR) of 1.16, which leans toward a 'Strong Buy,' and contrasts this with the Zacks Rank system, which assigns a 'Buy' rating based on earnings estimate revisions. The article emphasizes the limitations of brokerage recommendations and advocates for using tools like Zacks Rank for investment decisions.