Last Thursday night Microsoft (MSFT) posted impressive Q3 financial results.  This was surprising to a lot of analysts on the Street, many whom have made a living out of vilifying the so called evil empire for years.

But something very strange happened on Friday morning.  Actually, it was more than strange, it was shocking.  An analyst admitted that they were wrong.  WRONG!  Not only did the analyst admit it, he mentioned that he was wrong in the title of his research report.  Brad Reback of CIBC World Markets upgraded MSFT from Sector Underperformer (Sell) to Sector Performer (Hold) on Friday morning.  In the title of his report he said “We were wrong…”.

Good for Brad!  I, for one, have seen many analysts over the years “be wrong”, and in many cases “be very wrong”, and in a few cases “be disgracefully wrong”.  Never have I seen an analyst admit it, say it, and own it.

The inherent nature of financial analysts is to never admit that they have miscalculated, never admit that their thesis turned out to be incorrect, and never use the term “we were wrong” in their research.  Now, don’t get me wrong, I don’t expect analysts to fess up every time they make a bad call.  However, too often we see analysts make the wrong call on a stock and come up with feeble excuses that usually blame something (or someone) other than their analysis.  It was the darn macro-economic environment, management’s tone has changed, industry dynamics have altered, or the dog ate my original thesis and I had to come up with something at the last minute.

So, kudos to Brad.  His trailblazing note probably won’t win him any thumbs-up with buy-side clients, but maybe some will give him credit for telling it like it is.