Schlumberger (SLB) Is Considered a Good Investment by Brokers: Is That True?

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Zacks Equity Research August 12, 2025 4 min read SLB Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock.

While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?

Let's take a look at what these Wall Street heavyweights have to say about Schlumberger (SLB) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.

Schlumberger currently has an average brokerage recommendation (ABR) of 1.48, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 25 brokerage firms.

An ABR of 1.48 approximates between Strong Buy and Buy.

Of the 25 recommendations that derive the current ABR, 17 are Strong Buy and four are Buy.

Strong Buy and Buy respectively account for 68% and 16% of all recommendations.

While the ABR calls for buying Schlumberger, it may not be wise to make an investment decision solely based on this information.

Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias.

According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.

In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading.

Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance.

So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

Although both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.

The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28).

In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions.

It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations.

Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.