Bombardier: 'Sell is a four-letter word'
Analysts' recommendations should not be taken at face value. - Watch-out
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January 26, 2020 - by Paige Ellis for bnnbloomberg.ca
In Oct. 2017, just days after the Airbus-Bombardier joint venture was announced, Fong cut his rating on Bombardier's stock to sell from buy, according to data compiled by Bloomberg. He maintained that rating until the following February.
That's the last time an analyst issued a sell rating on Bombardier. Since Fong's initial downgrade, the stock has shed more than half of its value. And yet, analysts who cover the stock have overwhelmingly advised clients to buy shares.
"Analysts' sentiment has been an almost-perfectly contrarian indicator for [Bombardier] shares over the last fifteen years," said Brian Madden, a Toronto-based portfolio manager and senior vice-president at Goodreid Investment Counsel, in an email to BNN Bloomberg. Madden said it has been about two decades since he last owned the stock.
"Sell is a four-letter word," he added. "Many on the buy side have come to interpret hold as actually meaning sell."
Norman Levine, the managing director of Portfolio Management Corp., similarly said analysts' recommendations should not be taken at face value.