In addition to providing estimates of what they think a company's sales and earnings will be, Wall Street analysts also provide recommendations for stocks they cover, such as "Buy," "Hold," or "Sell." When an analyst changes his or her rating for a company's stock, the stock price often moves in the direction of the change. Does this upgrade or downgrade affect the business prospects of the company? No, the opinion of one person does not alter the intrinsic value of the firm, which is determined by the company's cash flows. But maybe the analyst made the change because he or she thought the company's business prospects have deteriorated. Maybe that's right, maybe not. Check it out, and decide for yourself.
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