Why Wallstreet Analysts are Biased and Why You may Not want to Take their Advice in Regards to GMXR
My track record on analyzing GMXR is near perfect. Note how my GMXR FY2006 EPS estimate on March 10, 2006 was $0.67 when wallstreet was calling for $1.67. Today Wallstreet is calling for EXACTLY $0.67. My analysis is right on target! Given the fact that the Wallstreet analysts were way off target on their earnings projections in March of 2006 when I was right on target in addition to the fact that the Wallstreet analysts may be biased it would make sense to listen to an unbiased independent researcher such as myself.
Why listen to what I have to say?
1. I understand GMXR fundamentals
2. I understand GMXR earnings potential. Reference my posts on March 10, 2006 and compare them to Wallstreet analysts.
3. I understand GMXR management.
4. I have a proven track record that is archived for all to see.
5. I am unbiased in regards to GMXR. I am neither long nor short the shares. I receive no bonuses if GMXR shares trade higher or lower. The only reason I comment on the company is a result of the benchmarking between GMXR and ARD. (GMXR is part of a 9 company peer group that I use to value ARD.)
Why Wallstreet Analysts may be Biased and Why You may Not want to Take their Advice
1. Their bonuses may be at stake. Failure to meet target prices could cost them personally.
2. The analysts or their firms may be long GMXR Shares. It would be logical for them to try and 'talk the stock higher.'
3. Their jobs may be at stake. Bonuses aside sometimes analysts pay the ultimate penalty for being wrong: their job.
4. They are slow to understand GMXR
What are Wallstreet Analysts Saying Today?
When you read their December 20, 2006 updates please keep in mind that their research may be inherently biased. Therefore, you may not want to listen to their advice.
1. First Albany Capital $61 Price Target. Reiterate Strong Buy Rating
(Analysts Eric Hagen and Rhett Bruno)
2. Capital Southcoast, Inc. $51 Price Target. Reiterate Buy Rating
(Analysts Richard T. Moorman & Christopher George)
3. Ferris Baker Watts, Inc. $70 Price Target. Reiterate Buy Rating
(Analyst Richard F. Rossi)
It is amazing that these three analysts today felt compelled to "Reiterate" their "buy" and "strong buy" ratings. The possible main reason they felt the need to "Reiterate" is due to what they may have at stake personally as mentioned above. All three reports have headlines admitting disappointment in the horizontal well yet price targets and ratings remain unchanged. This is proof that these three firms fail to understand that the value of a company is not based primarily on proved reserves. Rather the long-term value of a company is based on a combination of proved reserves and the profit that can be expected as a a result of producing those reserves, the management team running the company, the fundamentals of the company, and the future growth prospects of revenues, net income and earnings per share.
In conclusion, it is easy to see that the Wallstreet analysts covering GMXR are slow to understand the company and may be biased in their support of the company even after yesterday's press release. On March 10, 2006 the Wallstreet consensus was calling for GMXR FY2006 earnings estimates of $1.67. At the same time I was calling for GMXR earnings of $0.67. Today Wallstreet analysts consensus is $0.67. Clearly Wallstreet is slow to understand GMXR, the fundamentals, what drives profits & valuation and the poor quality management team running the company. One of the main problems with Wallstreet analysis of GMXR is the fact that they focus their valuation on reserve growth while discounting GMXR's lack of earnings power, their high cost structure or the questionable management team running GMXR. Therefore, there are many reasons why you may want to avoid the biased and off-target advice of Wallstreet analysts and instead listen to on-target and unbiased logic.
My track record on analyzing GMXR is near perfect. Note how my GMXR FY2006 EPS estimate on March 10, 2006 was $0.67 when wallstreet was calling for $1.67. Today Wallstreet is calling for EXACTLY $0.67. My analysis is right on target! Given the fact that the Wallstreet analysts were way off target on their earnings projections in March of 2006 when I was right on target in addition to the fact that the Wallstreet analysts may be biased it would make sense to listen to an unbiased independent researcher such as myself.
Why listen to what I have to say?
1. I understand GMXR fundamentals
2. I understand GMXR earnings potential. Reference my posts on March 10, 2006 and compare them to Wallstreet analysts.
3. I understand GMXR management.
4. I have a proven track record that is archived for all to see.
5. I am unbiased in regards to GMXR. I am neither long nor short the shares. I receive no bonuses if GMXR shares trade higher or lower. The only reason I comment on the company is a result of the benchmarking between GMXR and ARD. (GMXR is part of a 9 company peer group that I use to value ARD.)
Why Wallstreet Analysts may be Biased and Why You may Not want to Take their Advice
1. Their bonuses may be at stake. Failure to meet target prices could cost them personally.
2. The analysts or their firms may be long GMXR Shares. It would be logical for them to try and 'talk the stock higher.'
3. Their jobs may be at stake. Bonuses aside sometimes analysts pay the ultimate penalty for being wrong: their job.
4. They are slow to understand GMXR
What are Wallstreet Analysts Saying Today?
When you read their December 20, 2006 updates please keep in mind that their research may be inherently biased. Therefore, you may not want to listen to their advice.
1. First Albany Capital $61 Price Target. Reiterate Strong Buy Rating
(Analysts Eric Hagen and Rhett Bruno)
2. Capital Southcoast, Inc. $51 Price Target. Reiterate Buy Rating
(Analysts Richard T. Moorman & Christopher George)
3. Ferris Baker Watts, Inc. $70 Price Target. Reiterate Buy Rating
(Analyst Richard F. Rossi)
It is amazing that these three analysts today felt compelled to "Reiterate" their "buy" and "strong buy" ratings. The possible main reason they felt the need to "Reiterate" is due to what they may have at stake personally as mentioned above. All three reports have headlines admitting disappointment in the horizontal well yet price targets and ratings remain unchanged. This is proof that these three firms fail to understand that the value of a company is not based primarily on proved reserves. Rather the long-term value of a company is based on a combination of proved reserves and the profit that can be expected as a a result of producing those reserves, the management team running the company, the fundamentals of the company, and the future growth prospects of revenues, net income and earnings per share.
In conclusion, it is easy to see that the Wallstreet analysts covering GMXR are slow to understand the company and may be biased in their support of the company even after yesterday's press release. On March 10, 2006 the Wallstreet consensus was calling for GMXR FY2006 earnings estimates of $1.67. At the same time I was calling for GMXR earnings of $0.67. Today Wallstreet analysts consensus is $0.67. Clearly Wallstreet is slow to understand GMXR, the fundamentals, what drives profits & valuation and the poor quality management team running the company. One of the main problems with Wallstreet analysis of GMXR is the fact that they focus their valuation on reserve growth while discounting GMXR's lack of earnings power, their high cost structure or the questionable management team running GMXR. Therefore, there are many reasons why you may want to avoid the biased and off-target advice of Wallstreet analysts and instead listen to on-target and unbiased logic.
posted by -Aztec- at 8:57 AM
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