Analyst Rollercoaster (IMAX)
I just noticed that the ridiculously active analyst for IMAX over at SunTrust has made yet another move. Thought it might be interesting to look at what his moves have been since they started covering this stock back in September -- roughly six months of coverage, during which the stock has not moved particularly dramatically compared to its past performance, and the only really big news in that time (in my opinion) was the news out today that they may be selling the company.
It is true that if you were on the ball and trading in and out on these recommendations you might have made a little money before taxes, depending on the size of your trades and your commissions -- you would have had to be lucky, though, and caught a good price on December 19 because the downgrade drove a dip and the shares closed at $7.61. If you bought and sold at average prices on the days of those recommendations, you could have easily lost money even before commissions.
During the time he went in, out, in, then back out again, no other analyst (there seem to be six active ones in IMAX coverage) has made a change to his IMAX call. ... which is reasonable, since during that time the underlying business maintained a pretty steady and uneventful (for them) growth trajectory.
I think what I'm most surprised by is an analyst having such an itchy trigger finger. That can't be good for anyone. If you take out the two swings in the middle, when a very quick trader could have made some money if he was lucky and right, we've got an initiated coverage at a buy, then a downgrade six months later after a 5% increase in price brought the shares too close to his price target. Sheesh -- that definitely doesn't seem worth it. If you think the shares of a very small and volatile stock will advance less than 10%, why on earth did you have a buy on it in the first place?
I don't mean to pick on the analyst for SunTrust too much ... but next time I'm on the verge of being swayed by an analyst call, I think I'll look at those numbers again.
- SunTrust initiated coverage with a Buy on IMAX on September 14, a day when the price opened at $9.47
- Then they downgraded IMAX to Neutral on December 19, when it opened at $8.29 (and quickly dropped thanks to the downgrade)
- And re-upgraded it again to Buy a month later on January 26, when the price was $7.79
- And today, with the shares at about $10 (I don't know when the downgrade went out, but that seems a fair price), they have again downgraded them to Neutral according to a Marketwatch story.
It is true that if you were on the ball and trading in and out on these recommendations you might have made a little money before taxes, depending on the size of your trades and your commissions -- you would have had to be lucky, though, and caught a good price on December 19 because the downgrade drove a dip and the shares closed at $7.61. If you bought and sold at average prices on the days of those recommendations, you could have easily lost money even before commissions.
During the time he went in, out, in, then back out again, no other analyst (there seem to be six active ones in IMAX coverage) has made a change to his IMAX call. ... which is reasonable, since during that time the underlying business maintained a pretty steady and uneventful (for them) growth trajectory.
I think what I'm most surprised by is an analyst having such an itchy trigger finger. That can't be good for anyone. If you take out the two swings in the middle, when a very quick trader could have made some money if he was lucky and right, we've got an initiated coverage at a buy, then a downgrade six months later after a 5% increase in price brought the shares too close to his price target. Sheesh -- that definitely doesn't seem worth it. If you think the shares of a very small and volatile stock will advance less than 10%, why on earth did you have a buy on it in the first place?
I don't mean to pick on the analyst for SunTrust too much ... but next time I'm on the verge of being swayed by an analyst call, I think I'll look at those numbers again.
Labels: IMAX
This article posted by One Guy @ 3/09/2006 03:36:00 PM 0 comments
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
