I want to thank Nomura for the upgrade. I appreciate the bump up in price and sure hope he is right.
Being a value guy, I wouldn't be buying it at this point, but I am not a growth investor. I can only say that I am happy that I own it at less than book value.
While owning it at less than book value does not totally protect you, it does enhance your margin of safety. I believe it is better to be safe than sorry in this steamy market.
The article says that other analysts are also bumping up their future estimates. Two things come to mind.
First, the herding effect. Analysts are just as subject to following the crowd like other market participants. This is similar to when you were a kid and did something wrong. After being caught, you told your mom "Everyone else is doing it." I would be willing to bet it didn't hold water with your mom. Should it here? I would ask how much "skin" the analysts have in the game.
Second, anchoring and adjusting. This is when analysts increase their projections step by step. Supposed they had estimated $.50 earnings yesterday, but today they think the earnings should be $1.00. Instead of going right up to $1.00, they first put out an estimate of $.60, then $.70, then $.80, etc. The herd is slowing ratchetting up their estimates in mass. It is kind of like putting your toe in the pool versus just diving in.
I would proceed cautiously if at all. Remember the butt whooping you took when you told your mom that everyone else was also doing something you knew you shouldn't be doing? Ouch!
