Analyst sponsorship from professional brokerage firms and independent research firms helps investors decide which stocks to purchase. It is important to note that these are only recommendations, and in no way can the analysts guarantee the future price of the stock.
A conflict of interest can occur if the analyst has a position in the stock he or she is sponsoring. It can also occur when analysts are making recommendations on stocks that the investment firm has a vested interest in (i.e. underwriting a new offering). The latter is avoided by keeping analysts and underwriters separated by what is known as a Chinese Wall.