FNArena’s Weekly Insights – February 10 2020

Paying attention to stockbroking analysts announcing their Conviction Buys and Sells can be highly beneficial to one’s investment portfolio, as no doubt experienced by many an FNArena subscriber.

Over the past two years in particular, I have methodically kept track of Conviction Calls in the market, and those have included ResMed, Magellan Financial Group, IDP Education, Cochlear, Goodman Group, Appen, EML Payments and various other high flyers.

Every now and then these Conviction Calls generate an absolute blooper; the stinker that leaves a bad taste that simply won’t go away. Boral and Challenger Financial come to mind, as well as EclipX Group and G8 Education.

In January we had the profit warning from Treasury Wine Estates ((TWE)) which, on one hand, vindicated the persistent Sell rating maintained by analysts at Citi, irrespective of their peers releasing more bullish assessments.

On the other hand, the Buy ratings that stood out prominently in December and early January subsequently led to four downgrades to Neutral while for Citi it was time to upgrade to Neutral, as the share price tanked.

One team of analysts that hasn’t budget post profit warning and quite the significant de-rating for the stock is the team at CLSA.

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