How to Make More Informed Investment Decisions with Analyst Ratings

Analyst Atif Malik at Citi Bank started coverage of Apple on June 29, 2023, with a buy rating and a $240 price target. Apple shares rose 2% on June 30, hitting a historic $3 trillion market capitalization.

Goldman Sachs downgraded Tesla from "Buy" to "Neutral" before the stock closed 6% down on June 26, the largest price decline over the past two months.

Analyst stock ratings can be valuable references for investors and are often considered as indicators within the stock market. But how do analysts rate stocks? Are their recommendations reliable? Can it really impact stock prices?

Can you imagine tracking stock ratings, companies' fundamentals, target prices, and top-performing analysts all under one tab? Don't miss Analyst Ratings on moomoo.

What can you expect here? Stock ratings, company fundamentals, professional analysts' estimates...You name it! Let's see how to make more informed investment decisions with analyst ratings.

Before we get into feature navigation, let's first go over what analyst ratings are.

01 What are analyst ratings? Why can they impact stock prices?

Analyst ratings help us know more information and offer us professional opinions when making investment decisions.

Analyst ratings were previously consultation reports exclusively available to investment institutions and high-net-worth investors. These reports were prepared by analysts who studied listed companies' financial statements, conference calls, interviews with executives, and conducted market surveys on the company's business. The reports provided forecasts for future performance, rating, and target prices, helping investors make informed investment decisions.

02 How to use Analyst Ratings on moomoo?

Analyst Ratings on moomoo, which provides analysts' expectations, ratings, and target prices, may help you understand a company's fundamentals, identify potential entry and exit points, and estimate potential returns.

Go to the Detailed Quotes page.

Tap on Company > Analyst Ratings to view Consensus Rating.

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Consensus Rating is based on the ratings of multiple analysts for the stock over the past three months. It gives the company an overall rating including buy, hold or sell.

Take Tesla as an example. Based on recommendations from 31 analysts, the company is rated "Hold" with 45.16% of analysts rating Hold, 32.26% of Buy, and 22.58% of Sell (as of 9/18/2023).

The second section is Target Price. Here on the chart, you can see the trend of the stock's closing price over the past twelve months, the current price, and the future price projections for the upcoming twelve months. The projections include the highest(green), lowest(red), and average(grey) stock prices estimated by analysts for the upcoming twelve months, which can help us estimate the range of potential returns. (as of 9/18/2023).

How to Filter and Track Top-Performing Analysts？

Scroll down to see Detailed Ratings, where you can check ratings from all institutions and analysts in a year. It is shown chronologically, with the latest rating at the top.

For each institution or analyst, you can see a chart displaying the stock's closing prices along with all ratings given by selected institutions within the past year. In this subsection, the color used to represent "Up" indicates a Buy rating, the color used to represent "Down" would indicate a Sell rating, and gray signifies a Hold rating.

(Data as of 9/18/23)

Let's take Tesla as an example.

On Sep.18, 2023, Goldman Sachs gave Tesla a buy rating and a $275 price target for the upcoming twelve months.

Tap on the name of this institution to view the date, analyst name, and price target of each rating on this page.

Likewise, tapping on 'Analyst' will display all analysts who rated Tesla in the previous year, with the ratings sorted chronologically.

In Tesla's case, the latest rating is a Buy, with a $275 price target given by Mark Delaney on Sep.18, 2023. He's rated Tesla 18 times in one year.

Tap on the analyst's name, you can see all the ratings he gave Tesla, including the dates and the price targets. You can also check the detailed analysis of each rating.

How to filter top-performing analysts？

We rank analysts' rating quality using a star system based on their previous success rates and average returns.

• Success Rate refers to the percentage of the analyst's ratings that have resulted in a positive return for investors.

• Average Return shows the simulated average percentage gain or loss generated by the analyst's recommendations. Both of the results are calculated on a virtual portfolio created by TipRanks.

For example, Alexander Potter has a success rate of 67.30% and an average return of 116.40% in the past year. Another analyst, Mark Delaney has a 72.70% success rate and an average return of 18.40%.

03 How to identify stocks using analyst ratings

Investors can refer to analyst ratings to identify stocks that meet their investment goals and personal objectives.

Here is an example. Tap on Markets > US > Analyst Ratings.

Top Analysts rank analysts by their success rates. Screen analysts with higher past success rates and check stocks they rated buy recently.

Rating Changes displays updates and revisions by analysts or institutions to their stock recommendations, which might help you adjust your investment portfolio in a more timely manner.

Stay informed about rating changes from your subscribed institutions or analysts to evaluate potential investment opportunities. By subscribing, you'll be notified when an institution or analyst publishes a new rating or makes revisions.

04 Tips：

01 Pay attention to downgrades: A downgrade typically indicates the company's fundamentals are expected to worsen. Investors may consider closing their position when such a signal occurs.

02 Set notifications: Stay informed about rating changes from your subscribed analysts or institutions to help you make more informed investment decisions.