Does broker research add any value?

Someone asked me for some fundamental research on  JSW Steel after seeing my BUY recommendation. Suddenly I thought about checking as to what other analysts have said about the stock in the recent past.

Luckily a found a research report by Angel broking written in May 2009 after the company’s Q4 results. The price was quoting at 400 odd levels and their analysis made them issue a SELL with a 12 month target of 285!

And where do we see the stock 4 months later? Almost double the price at 900!

This makes me doubt the quality of research done by these brokers. You can be off target by 10-15% but to be off target of  400% is awful.

This is not an isolated case. Similarly PINC research had a HOLD on JSW Steel in May 2008 at a price of 997, after which the stock fell to a low of 170.

This makes me wonder the usefulness of these analyst reports in making profitable  investment decisions.

So next time you take these decisions based on these research reports by a sell side brokers, be careful. They might look very convincing but ask yourself if they are adding any value.

What is your opinion? How do you find your investment ideas?