A study of analyst recommendations at the major brokerages shows that International Business Machines Corp. (IBM) is the #25 broker pick, on average, out of the 30 stocks making up the Dow Jones Industrial Average, according to ETF Channel. Within the broader S&P 500, when components were ranked in terms of analyst favorites, IBM claims the #390 spot.
In forming this rank, the analyst opinions from the major brokerage houses were tallied, and averaged; then, the underlying components were ranked according to those averages. Investors often interpret analyst opinions from different angles — when companies have a low rank among analysts, it isn’t necessarily the case that investors should conclude that the stock will perform poorly. It can, of course, but a bullish investor could also take the contrarian angle and read into the data that there is lots of room for upside because the stock is so out of favor.
From the other direction, a popular analyst pick could mean that many sharp minds individually came to the same bullish conclusion, and therefore the stock should do well, but it could also mean that if the company stumbles, that would come as a negative surprise.
For these reasons, we at ETF Channel find value to putting together these rankings, because both the top and the bottom ends of the list can often make for some interesting stock picking ideas for further research.
Below is a chart of rank over time:
According to the ETF Finder at ETF Channel, IBM makes up 8.32% of the First Trust NASDAQ Technology Dividend Index Fund ETF (TDIV).
IBM operates in the Information Technology Services sector, among companies like Accenture plc (ACN) and Automatic Data Processing Inc. (ADP). Below is a three month price history chart comparing the stock performance of IBM, versus ACN and ADP.