IPO University

Whisper Numbers

Earnings estimates that are often circulated within the investment community but are different from estimates found in research reports written by Wall Street equity analysts. The discrepancy in official estimates and word of mouth estimates results from models that are not always up to date and the tendency of analyst models to be conservative. It is asserted by some that analyst estimates do not truly reflect the analysts’ performance expectations since much of the information that filters down to Wall Street comes directly from the subject companies. Much of the controversy surrounding whisper numbers has to do with why Wall Street does not incorporate independent value judgments when formulating estimates, rather than blindly accepting information from companies eager to manage expectations. One consequence of whisper numbers is that a company can see its stock price fall after delivering earnings and guidance that "beat" Street estimates.