what were you saying? <ggg>
Anything but a raging "buy" is a "sell" on Wall Street
NEW YORK, July 26 (Reuters) - Anyone pouring over the 27,000 rosy stock recommendations of U.S. analysts should keep one thing in mind: Anything but a raging ``buy'' on a stock means a ``sell.''
Investors on Wednesday got another taste of Wall Street's double-speak when an analyst downgraded his rating on the stock of photocopier maker Xerox Corp.(NYSE:XRX - news) to ``neutral'' but appeared to urge clients to sell the shares at the same time.
``After a long and arduous ride, it's now time to fully abandon ship in our opinion,'' said analyst Jonathan Rosenzweig of Salomon Smith Barney in a research note. ``While it is certainly disquieting to do so at such depressed levels, the risks still seem to high.''
This was just the latest example of how Wall Street's elaborate system of rating stocks skirts around an outright ``sell'' rating.
Analysts often avoid such a rating for fear of losing existing or potential investment banking business from the companies they cover, said Chuck Hill, director of research of market research firm First Call/Thomson Financial. Analysts also worry a company's management may cut them off from meetings and privileged information, Hill added.
Of the 27,000 U.S. stock recommendations, 37.5 percent are ``strong buys,'' 37.1 percent are ``buys,'' 24.7 percent, and a minuscule 0.7 percent are ``sells,'' according to First Call data. Some of these rosy ratings may be attributed to the long-running bull market in stocks, but savvy traders know how to read between the lines.
``A 'hold' means 'sell'; a 'buy' means 'hold; and a 'strong buy' means 'buy,''' Hill said. ``You just have to ratchet the scale down because it's inflated.''
Rosenzweig wasn't available for comment, but a Salomon Smith Barney spokeswoman said Rosenzweig meant he had given up on his previous ``outperform'' rating on the stock and wasn't urging clients to sell Xerox shares.
``He's abandoning the rating, not the stock,'' she said.
Xerox, for its part, didn't like Rosenzweig's report but generally tries not to take negative research reports personally, a Xerox spokesman said.
``We respect the author and we respect his opinion, although we absolutely disagree with it,'' the spokesman said. The company would not take reprisals against analysts issuing a ``sell'' on the company's stock, he added.
To be sure, Rosenzweig kept his price target of $28 for Xerox intact, even though the stock slumped to a 5-year low of 14-13/16 after the company warned profits would sag in the second half.
Just last Thursday morning, a Lehman Brothers analyst downgraded Citrix Systems Inc. (NasdaqNM:CTXS - news) to a ``neutral'' and set a new price target of $15 on the software company's stock. The analyst, who wasn't immediately available for comment, in effect was telling clients to sell Citirx, because the stock had last traded at 22-1/8.
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