Analysts on the sell-side are offering a consensus “Buy” rating on shares of Hornbeck Offshore Services, Inc. (NYSE:HOS).  Using the following ratings scale: 1.0 Strong Buy, 2.0 Buy, 3.0 Hold, 4.0 Sell and 5.0 Strong Sell, analysts have an average recommendation of 2.00 on the shares.  Based on a recent trade, the shares are hovering around $0.45 which, according to the Street, yields significant upside potential to the $2.55 consensus price target

As the next earnings season comes into focus, investors will be keeping watch on the performance of companies that they own. A company that continually exceeds earnings projections is most likely on the right track. On the other end of the spectrum, a company that frequently misses earnings projections might provide some insight to the fact that something isn’t right. Although it is important to keep track of earnings estimates and results, it shouldn’t be the only thing that the investor is looking at regarding the stock. Just because a company misses or beats expectations for one quarter may not mean anything super special. Tracking performance over a longer period of time can help paint the bigger picture of what is going on with the company. Sharp investors often have the ability to look deeper into the numbers to see the actual causes of an earnings hit or miss. Of course estimates are just that, estimates, and some analysts may be more accurate than others.

Wall Street firms hire hundreds of analysts who provide recommendations on stocks.  Typically, these analysts look at a company’s fundamentals, building financial models from this information in order to project future trends, specifically future earnings. 

These projections are then used as a basis for providing “buy” or “sell” recommendations.  Many investors consider these recommendations very seriously, and often times whenever an analyst changes their outlook on a stock, the price change almost immediately.

Analyst recommendations should be approached with caution for many reasons.  Many times a conflict of interest arises due to the relationship between company that they work for and the company whose stock they are paid to track. 

Often, analysts are responsible for creating reports on companies that are currently or could potentially be a client of their employer.  Analysts don’t want to offend any companies that could possibly be a potential client down the road, so they are inclined to put a positive spin on the stock. 

Beyond issuing buy, sell, or hold recommendations, analysts also create earnings estimates.  These are earnings per share (EPS) numbers that analysts believe a particular company will report on its next statement.  These estimates have been growing in importance on Wall Street over the years, because the companies that “beat” their estimates usually see their stock prices grow while those who don’t usually watch them shrink.

RSI 

Hornbeck Offshore Services, Inc. (NYSE:HOS)’s shares may have a significant upside to the consensus target of 2.55, but how has it been performing relative to the market?  The stock’s price is 0.45 and their relative strength index (RSI) stands at 30.58.  RSI is a technical oscillator that shows price strength by comparing upward and downward movements.  It indicates oversold and overbought price levels for a stock.  

Hornbeck Offshore Services, Inc. (NYSE:HOS) shares are moving 0.20% trading at $0.45 today.

Investors are constantly looking to find winning stocks that have been largely overlooked. With markets still riding high, this may not be the easiest thing in the world right now. Finding those perfect stocks before they become household names may take a lot of research and homework. Many investors will apply various strategies for picking stocks. If there was one that worked for everybody, it would make things super easy. Of course, this is not the case. Obviously, there are no guarantees in the stock market. Some investors may only focus on the fundamentals of a company and completely ignore the technicals. Others may choose to only watch technicals and never take a look at the underlying company information. Combining both areas of research may help give a better feel of what is going on with the stock in the long term and the short term. Individual investors who manage their own portfolios may need to put in a lot more time than those who don’t. Successful investors often have an uncanny way of filtering out the noise and keeping their focus on the right information.