Reporting the News vs Creating the News Cycle

CVS was downgraded today by Oppenheimer analyst Michael Wiederhorn to market perform. The value of such a downgrade AFTER the stock slid from over $112 a share in July of 2015 to under $53 a share recently is a bit suspect.

That said, a downgrade would normally cause a stock price to slide at least a bit, though CVS was up 2.67% today in spite of the downgrade.

Barron’s Jack Hough published an article stating CVS is a buy, causing the stock to jump. Barron’s then published a follow up article reporting on CVS stock rising because Barron’s called the stock a buy earlier the same day.

Added: Barron’s keeps doing more CVS articles & video interviews to compliment their CVS feature.

And there is a not-so-subtle reason CVS may have pushed hard to couch expectations earlier this year.

Why is this interesting? If senior management knows they are going to get record large option grants in a few months' time, is it better to have a low stock price or a high stock price? Is the incentive to overpromise or underpromise on guidance? $CVS https://t.co/8wbIa0u36Y

— Inquisitive Investor (@QuisitiveInvest) April 16, 2019

Expert Analyst Calls by Goldman Sachs 

One of my favorite articles of all time about analyst picks was published by Jeff Matthews back in 2010, Goldman 8, Public Zero…The Teachable Moment of Bare Escentuals

Another class of losers, however, would be pretty much anybody who took Goldman Sachs’ advice to sell their BARE stock just six weeks ago. Indeed, more than 5 million shares changed hands in the two days following Goldman’s early December move from the always-meaningless “Neutral” rating to the rare “Sell” rating, and the stock traded down $2, wiping out $200 million of the company’s valuation.

…

Now, you might think such a ridiculous price would have merited an upgrade: that $2.45 per-share valuation amounted to only 3-times EBITDA, a steel-company multiple for a non-steel-company-like 70% gross margin, 28% operating margin business.

Besides, if you liked it a $36.50, shouldn’t you love it at $2.45?

You might think that, but you’d be wrong. In fact, Goldman kept its “Neutral” rating and thus missed a 425% rally in shares of BARE until the stock hit $13.00 a share—where Goldman’s Finest deemed the shares an outright “Sell” just over a month ago.

…
the financial advisor to Bare Escentuals in its acquisition by Shiseido is none other than…

Yes, you got it.
Goldman