OneSpan (OSPN) Is Considered a Good Investment by Brokers: Is That True?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on OneSpan (OSPN), and emphasizes the importance of using these recommendations in conjunction with other analytical tools for making investment decisions [1][4]. Group 1: Brokerage Recommendations - OneSpan has an average brokerage recommendation (ABR) of 1.80, indicating a rating between Strong Buy and Buy, based on recommendations from five brokerage firms [2]. - Out of the five recommendations, three are classified as Strong Buy, accounting for 60% of the total recommendations [2]. - Despite the positive ABR, the article cautions against making investment decisions solely based on this metric, as studies show limited success of brokerage recommendations in predicting stock price increases [4]. Group 2: Analyst Bias and Tools - Analysts from brokerage firms often exhibit a strong positive bias in their ratings due to vested interests, leading to a higher number of Strong Buy recommendations compared to Strong Sell recommendations [5][9]. - The Zacks Rank, a proprietary stock rating tool, is presented as a more reliable indicator of near-term price performance, based on earnings estimate revisions [7][10]. - The Zacks Rank is distinct from the ABR, as it is a quantitative model that reflects timely earnings estimate revisions, while the ABR may not always be up-to-date [8][11]. Group 3: Earnings Estimates and Investment Potential - The Zacks Consensus Estimate for OneSpan has increased by 18.1% over the past month, reaching $1.34, indicating growing optimism among analysts regarding the company's earnings prospects [12]. - The significant change in the consensus estimate, along with other factors, has resulted in a Zacks Rank of 1 (Strong Buy) for OneSpan, suggesting potential for stock appreciation [13].