{"id":1628,"date":"2010-08-20T17:14:17","date_gmt":"2010-08-20T21:14:17","guid":{"rendered":"http:\/\/www.credittrends.com\/blog\/?p=1628"},"modified":"2010-08-21T11:16:05","modified_gmt":"2010-08-21T15:16:05","slug":"when-will-analysts-learn","status":"publish","type":"post","link":"https:\/\/www.credittrends.com\/blog\/2010\/08\/20\/when-will-analysts-learn\/","title":{"rendered":"When Will Analysts Learn?"},"content":{"rendered":"

HEADLINE ON HEWLETT-PACKARD<\/p>\n

Hewlett-Packard (HPQ<\/a>: $39.72, $-1.0400,-2.55%) is down after Morgan Stanley (MS<\/a>) says the company needs more aggressive buybacks to boost shares, Bloomberg reports. Morgan Stanley cut its price target to $56 from $62.<\/strong><\/p>\n

If this is a true representation as to how this analyst feels, it speaks poorly as to the state of current day security analysis.<\/p>\n

READ FULL ARTICLE<\/span><\/a><\/p>\n

<\/p>\n

It was just a month ago when reporters wrote of the \u201cpop\u201d in GE (GE<\/a>) shares following that firm\u2019s large buyback announcement.<\/p>\n

General Electric shares gained for a third consecutive session as investors continued to celebrate the sprawling conglomerate\u2019s decision to increase its dividend and launch a share buyback.<\/em><\/strong><\/p>\n

Source: Wall Street Journal, July 27, 2010<\/em><\/strong><\/p>\n

Look at it since\u2014GE stock is now underperforming the S&P 500 Index since the $15 billion buyback announcement:<\/p>\n

\"\"

If I were the supervisor of that HPQ analyst I would have him prove to me why an increase in accounting ratios such as P\/E or return on equity, with no commensurate rise in free cash flow or return above that currently forecasted would result in a higher share price\u2014it never has and never will\u2014ask the people at IBM (IBM<\/a>), Macy\u2019s (M<\/a>), Home Depot (HD<\/a>), or those financial institutions which bought back several hundred billion dollars worth of stock prior to the credit meltdown.<\/p>\n

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