The Facebook Inc(NASDAQ:FB) stock is being relentlessly peddled to investors and investment managers by analysts and brokerages and this can be quite a worrying trend.
The share price of Facebook dropped to less than half the value at which it debuted on the stock exchanges, though it has rallied a bit since then.
However the question remains – are these recommendations being made justified? According to the Wall Street Journal this could be a problem.
“What some see as the relentless “buy, buy, buy” optimism has deepened scepticism about the Wall Street stock-pitching machine. Critics say Facebook is a telling example of the divided loyalties at many firms, which woo lucrative investment-banking clients and then prod brokerage customers to buy the same stocks even if they look bruised.”
The Journal has the view that the analysts’ recommendations are not really tenable and may be luring investors into wrong buying decisions.
Analysts, who have made the buy recommendations, have fixed a price target of $38 a share for the stock.
In their defence it can be said that they genuinely feel that the Facebook stock is undervalued and there is scope for the share price to rise.