“Three research analysts have rated the stock with a hold recommendation, one has issued a buy recommendation and three have issued a strong buy recommendation on the company. SciQuest’s rating score has improved by 7.8% from three months ago as a result of a number of analysts’ ratings changes.” – July 2nd, 2015, Dakota Financial News
First, Spend Matters selects SciQuest as a “Provider to Know in 2015.”
Then yesterday, analysts express their enthusiasm for the company’s stock with either a “hold”, “buy” or strong “buy” recommendation.
Is it possible that I have missed the mark on my assessment of the company’s future?
Perhaps there are special glasses that bestow upon the wearer an ability to see things that the rest of us mere mortals cannot see? How can a total of seven – that’s right seven – analysts, be so enthusiastic about Sciquest’s future to suggest that investors jump in with both feet?
“Unfortunately for investors, there’s a whole body of evidence demonstrating that market forecasts have no value (though they provide me with plenty of fodder for my blog) — the accuracy of forecasts is no better than one would randomly expect. For investors who haven’t learned that forecasts should only be considered as entertainment, or what Jane Bryant Quinn called investment porn, they actually have negative value because forecasts can cause them to stray from well-developed plans.” – CBS Money Watch
Not wanting to be disrespectful of the Dakota Financial News and the analysts about which the publication writes, it would, according to a CBS Money Watch report, appear that the accuracy of analyst predictions and advice such as the ones offered regarding SciQuest, is tantamount to flipping a coin – or worse. On a side note, I must admit that I had never heard the term investment porn previous to my research for this article, so you do learn something new everyday.
Unfortunately, the above provides additional confirmation that industry coverage for the most part has historically been based upon a combination of backroom buddy deals, financial market manipulation, and generally speaking, overly simplistic product positioning. Or to put it another way, analyst and journalist coverage has been more infomercial than truly informative.
Going forward, we all have to start filtering the information we receive through a more discerning lens of insight and understanding.
The difference between years past and today, is that through the Internet, the general market has as much access to information as those covering the industry. This can and should be empowering, because it enables you, the reader, to truly scrutinize the “insights” being offered under the banner of expert advice. This in turn will put you in a better position to make the right decisions for you and your organization.
Of course this new reality demands more from those covering the industry.
When for example, I had received an e-mail indicating that Santa Clara had used my articles to do their research to further justify the right eProcurement strategy for the County, I was reminded – not that I needed to be – of the gravity of my responsibility to get it right.
Think about it for a minute. The success of the Santa Clara initiative is now – at least in part, my responsibility. The same goes for all of the other public and private sector organizations who have followed the posts here on this blog over the years. At the end of the day, it is the outcomes that will ultimately determine the contribution I, as well as anyone else who covers this industry, has made.
Given the above, I think that it is time for analysts and journalists to put away their x-ray vision eyeglasses and elevate their game to a new level, myself included.
As for SciQuest, and knowing what you now know, what do you think . . .