Do Bankers Get Pissed When Their Analyst Rates Stock a "Sell?"

Just read that an analyst at Goldman rated Intel a sell.

www.cnbc.com/2018/08/10/goldman-sachs-downgrades-i...

I know back in the good ol' fraudulent days, analysts like Henry Blodget and (maybe) Mary Meeker got caught touting stocks publicly, while bashing them privately -- basically because there was intense pressure not to rate an existing or potential IB client a sell. That's why I was surprised that an analyst at Goldman would put the Scarlet S onto a big company like Intel...

I guess this is pretty admirable on the analyst's part, but... is he gonna get shit from his bankers? And did he just damage his career/potential bonus?

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Comments (3)

Most Helpful
Aug 10, 2018

I'd say there are only two cases in which bankers get annoyed with research for issuing Sell ratings:

  1. When the bankers think the analyst genuinely doesn't understand the company's business and prospects, and issued the report and rating after doing insufficient work.
  2. The analyst worked with banking to evaluate the company when it was an IPO prospect, signaled support for the business, valuation, offering price, etc, but then initiated coverage - in the absence of new and negative information - with a neutral or negative rating.
Aug 10, 2018

It's something like only 10% of all stocks are rated a sell. If you rate a company a sell, the company's gonna get pissed at you and stop giving the analyst access to management and other perks like that - so not in the interest of the analyst to rate anything a sell.

    • 1
Aug 10, 2018