In Wall Street talk where 90% of the analyst game is promoting good relationships (and ratings) so their investment banking arm can win future business, an outright sell rating is rare as a dodo bird. I wrote about this quite a few years ago. [Dec 5, 2007: The Games Analysts Play... Why No One Ever Says Sell] Usually neutral is the way an analyst can say sell but in a non offending way. Hence last evening's downgrade of Sina (SINA) by Goldman Sachs to sell is quite interesting. They did move the price target up from $78 to $105, but obviously the stock is far past that level. Now those with a cynical eye, may say Goldman just wants to help clients get a cheaper price on the way to far higher levels for the stock. ;)
With the stock massively overbought, until proven otherwise this is just another buying opportunity as the momo trade takes a day (or at least an hour) off. The stock is down 5% in premarket...
- Goldman Sachs downgraded SINA Corporation from Neutral to Sell citing unfavorable risk-reward. The price target was raised from $78 to $105, suggesting 26% downside.
- The analyst believes the stock is now being mainly driven by expectations that Weibo will evolve from a social media into a fully fledged social network, which they say will be challenging.
- In our new analysis, we believe the most likely outcome is for Weibo to become an alternative loosely-engaged social network weighted toward its distinctive social media elements, and for Tencent Pengyou to become the dominant social network in China by leveraging its much larger QQ community and more developed platforms.