The Week's Best & Worst Analyst Calls (WCG, MSFT, NILE, BRCM)

Wall Street analysts get great kudos sometimes, and other times they get the leper treatment.  There were many movers this week, and some of these research notes are actually carryovers from the week before.

The best two calls this week belong to Goldman Sachs, and even though more analysts and traders focus on Microsoft the best call went to WellCare.

WellCare Health Plans (NYSE:WCG) was an implosion this week we noted as having been on the Americas Sell List at Goldman Sachs since mid-February.  The FBI raid’s entire extent this week is still not fully known, but Goldman Sachs upgraded the shares today, or sort of.  The full note summary is here, but this was the biggest winner this week with a huge research driven profit for investors that followed the Goldman Sachs call. Kudos!

On Microsoft (NASDAQ:MSFT), 24/7 Wall St. noted last week "with the conspiracy theory hat on" that Goldman must have glimmered the best data out there by taking the risk of upgrading Mister Softie (or Master Chief) to the "Americas Conviction Buy List" right before the Intel earnings were coming out.  We noted that this was very gutsy and it looks Sarah Friar has proved she can be every bit of or more what Rick Sherlund was there.  Kudos!

There were some calls that haven’t done so well, too.  Maybe there is some corporate trickery out of companies or the companies not being able to recognize trends in time.  Nonetheless there was some big drops this week that resulted in many firms getting blindsided.

Broadcom’s (NASDAQ:BRCM) performance will have accidentally qualified for a runner up status here.  The truth is that something was very wrong that had not been telegraphed.  You could blame the Texas Instruments tie or the Ericsson tie and there are of course others, but everything was indicating that the stock even if it didn’t go up on earnings would at least be in a much higher trading range.  Sometimes both the charts and the fundamentalists are wrong, and that was the case here.  It tricked us too (preview here).  Shares were above $42.00 and just last week had put in a new year high.  But Deutsche Bank, American Technology & Research, and Wachovia all ended up downgrading the stock after the earnings and outlook.  Just the week before Citigroup raised it from a Hold to Buy, so they get in the soup this week even though it was last week’s call.

And then there is the active trader analysis that is still an undecided verdict, but the analyst from Citigroup has hit this one right recently even though the firm’s position missed a huge move earlier this year.  This is on Blue Nile Inc. (NASDAQ:NILE)….. Today NILE was upgraded from a Sell to a Hold after shares closed at $78.13.  But the downgrades from a Hold to SELL was just on October 12, in the high-$80’s and just a couple or few days after this peaked above $100.00.  But back in mid-July they raised the stock from a Hold to Buy when shares were circa-$78 at the time.  But Citigroup downgraded this from a Buy to Hold back on January 12, 2007 when shares when shares were $38 to $39… That was after initiating coverage on March 6, 2006 when shares were around $33 to $34.  So it was just upside that was missed, and it was technically dead money for about 3 months after the call this January.  The verdict is out on this one, but active changes in analysis ahead of and after events (particularly when they make money like this) are worth noting.

Jon C. Ogg
October 26, 2007