Brokers are recommending On Holding (ONON) as a strong buy, but is it really a wise investment choice?
New York: Investors often look to Wall Street analysts for guidance on whether to buy, sell, or hold stocks. But do these recommendations really matter? Let’s dive into what analysts are saying about On Holding (ONON) and how reliable their advice is.
Currently, On Holding has an average brokerage recommendation of 1.32, which is pretty close to a Strong Buy. This score comes from 22 brokerage firms, with 18 of them giving it a Strong Buy and just one a Buy. That’s a solid 81.8% in favor of buying.
While the recommendation sounds good, relying solely on it might not be the best move. Studies show that brokerage recommendations often don’t help investors pick stocks that will rise in value. Why? Because brokerage firms have their own interests, which can lead to overly positive ratings.
For every “Strong Sell,” there are about five “Strong Buy” recommendations. This means that the advice from these firms might not always align with what’s best for individual investors. It’s smarter to use this info to back up your own research.
One tool that can help is the Zacks Rank, which rates stocks based on earnings estimate revisions. It’s a more reliable indicator of how a stock might perform in the near future. So, checking the Zacks Rank alongside the average brokerage recommendation could be a smart strategy.
Even though both the ABR and Zacks Rank use a scale from 1 to 5, they measure different things. The ABR is based on broker recommendations, while the Zacks Rank focuses on earnings estimates. Plus, the Zacks Rank updates more quickly, reflecting the latest trends.
As for On Holding, the Zacks Consensus Estimate for this year is steady at $0.90. This stability suggests that the stock might perform similarly to the market soon. Currently, it holds a Zacks Rank of #3, which means Hold. So, while the brokers say Buy, it might be wise to tread carefully.
