Back in April I wrote about Zipcar (NASDAQ: ZIP). At that time the stock was trading at $26.37. The stock has since visited $19.35 on June 9th, and now sits at $22.51. Over that time, the S&P 500 is basically flat. As they say, my “writing was on the wall.” I don’t get paid to write research – which is why I don’t offer recommendations in these posts. The upside to not getting paid is that I am able to give you an objective point of view (which would have helped you avoid the 26.6% slide).
As expected, since the time I posted to the story, the “Street” has come out with their own opinions (post the “quiet period”). While I would applaud the fact that the underwriters’ analysts came out of the gates with “Neutral” ratings. I don’t think they went far enough – do you? For it’s part, JP Morgan had a “Neutral” rating with a $29.50 price target in its initiation piece on May 24th. At the time, the stock was trading at $25.20 – anyone else see something wrong with that picture? After the stock continued it downward slide, JPM came out with an “Overweight rating with the same price target when ZIP shares hit $19.35 (still a premium to the IPO price). Net, net, had you followed JPM’s advice you’d be flat to down (depending on whether you decided to double down).
Goldman, another underwriter, came out on May 24th with a “Neutral” rating and a price target of $24. How can JPM’s price target be 20% higher than Goldman, yet they both have the same rating? Not to mention, ZIP was trading at $25.20 at the time (sounds like a “Sell” to me). To be fair, Oppenheimer has an outperform with a $30 price target – so JPM is not alone in its bullishness. Remember, there’s a reason brokers are called the “sell side.”
When it comes to rating systems on Wall Street, not all ratings were made the same – you have to read fine print. As with anything in life – buyer beware! My posts are free – so you get what you pay for. However, don’t forget, “some of the best things in life are free!”
Have a great week!