Thursday, May 26, 2016

Sell-Side Analysts Avoid the Tough Call on Oasis Petroleum - So What?

Looking for a job that can pay upwards of $400,000 a year – irrespective of proficiency? Consider a career as a Wall Street stock analyst. 

On May 9, uBS analyst William Janela maintained his “Hold” rating on E&P Houston-based Oasis Petroleum (OAS) and set a price target of $9. The company’s shares closed at $9.46 on May 10. 

Cantor Fitzgerald analyst Brad Carpenter reiterated a “Hold” rating on Oasis on May 19 and set a price target of $9. The company’s shares closed that day at $9.46. 

One of the worst kept secrets on Wall Street is that a “Hold” rating issued by research analysts is synonymous with a “Sell” rating. How come the analysts do not just tell investment banking clients to sell – and lock in profits? 
  • Some firms link compensation and bonuses— indirectly — to the number of investment banking deals the analyst helps to land. 
  • The issuance of unfavorable reports could alienate senior management and shutter future access. 
Setting a target price close to – or less than – the current price is a riskless way to earn your way to that six-figure salary. Where do I sign up?

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