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Mastercard -- A Tale of Great Expectations

NEW YORK ( TheStreet) -- MasterCard (MA - Get Report) reports this week, but enough about that. In the lead-up to their earnings -- really, any earnings -- it's essential to take inventory of Wall Street sentiment, something the media rarely does. I know, I know: the media is dutiful in telling us the numbers; precisely where Wall Street earnings estimates stand. Sometimes it's all they do.

But I'm talking ratings: how many Wall Street firms are rating the stock a so-called Buy -- and how many a Sell? In the near term, a shift in rating can push a stock. But f everyone is already rating the stock a Buy, it may have no impetus to run. Similarly, if a high number have the stock rated a Hold or lower, there is a bit more potential. This is not a foolproof measure or, by any means, the only factor a trader should be examining in the prelude to an earnings report. But it is one and it is a little troubling that the media pays it little, if any, mind.

Motley Fool was typical, running a story called "How High Will MasterCard Fly?" without looking at the proportion of buy ratings. Fox told us that MasterCard and fellow credit-card company Visa (V) were going to report, as well as Pfizer (PFE), CBS (CBS), Cablevision (CVC) and Time Warner (TWX) but they didn't give us one-thin clue about the ratings breakdown going into the report.

Break it down.

Forbes, to its credit, did: "In fact," they wrote, "the brokerage community has doled out a whopping 25 Buy ratings, compared to 10 Holds, and no Sells."

On this issue, central to our understanding of how stocks might react in the hours and days after issuing earnings, Forbes clearly shows the way.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page.

For his "Business Press Maven" column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers.

Fuchs appreciates your feedback; click here to send him an email.

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