From Nasdaq:

Many investors turn to brokerage recommendations by analysts before deciding whether to buy, sell, or hold a stock. For example, in the case of Alibaba (BABA), the stock has an average brokerage recommendation (ABR) of 1.27, which approximates between Strong Buy and Buy. However, brokerage recommendations have not been very successful in guiding investors to choose stocks with the most potential for price appreciation.

On the other hand, Zacks Rank, a tool with an impressive track record, categorizes stocks into five groups ranging from Strong Buy to Strong Sell. This tool works with earnings estimate revisions and is a direct indicator of a stock’s price performance. It is displayed in whole numbers from 1 to 5 and has a better success rate at predicting future stock prices compared to brokerage recommendations.

Analysts’ steady views regarding Alibaba’s earnings prospects indicate a Zacks Rank #3 (Hold) and a “Hold” ABR. While the company has a Zacks Consensus Estimate for the current year at $8.86, the recent change in the consensus estimate and other factors led to this ranking. When making an investment decision, investors are advised to validate their decisions with their own analysis and seek other effective tools as the best basis for investment.

Lastly, despite the “Hold” ABR, investors should be cautious with the Buy-equivalent ABR for Alibaba. Even if the tool maintains a balance among the five ranks it assigns, it would be wise to further validate investment decisions using other resources and analysis before proceeding.



Read more: Alibaba (BABA) Is Considered a Good Investment by Brokers: Is That True?