Brokers Suggest Investing in OneSpan (OSPN): Read This Before Placing a Bet

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on OneSpan (OSPN), and highlights the potential misalignment of interests between brokerage firms and retail investors [1][4]. Group 1: Brokerage Recommendations - OneSpan has an average brokerage recommendation (ABR) of 1.80, indicating a position between Strong Buy and Buy, with 60% of the five recommendations being Strong Buy [2]. - Despite the positive ABR, relying solely on this information for investment decisions may not be advisable, as studies suggest brokerage recommendations often fail to guide investors effectively [4][9]. Group 2: Analyst Bias and Zacks Rank - Brokerage analysts tend to exhibit a strong positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [5][9]. - The Zacks Rank, a proprietary stock rating tool, categorizes stocks based on earnings estimate revisions and is considered a more reliable indicator of near-term stock performance compared to ABR [7][10]. Group 3: Earnings Estimates and Stock Performance - The Zacks Consensus Estimate for OneSpan's current year earnings remains unchanged at $1.34, suggesting analysts have steady views on the company's earnings prospects [12]. - The unchanged consensus estimate has resulted in a Zacks Rank 3 (Hold) for OneSpan, indicating a cautious approach despite the Buy-equivalent ABR [13].