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New Analyst Coverage Puts Spotlight on These 4 Stocks
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Coverage initiation on a stock by analyst(s) helps in making investment decisions. This is because analysts provide key information on a stock, which is of great value to investors. There’s no denying that the lack of consistency in information creates inefficiencies that might result in misinterpretation of stocks.
Initiation of coverage by analysts usually depicts increased investor inclination. Investors, on their part, often assume that there is something in the stock that has attracted analyst attention. In other words, they believe that the company coming under the radar definitely has some value that can be tapped into. At times, increased investor focus on a stock encourages analysts to take a closer look.
Then again, average change in broker recommendation is always preferred over a single recommendation change.
Impact on Price Movement
The price movement of a stock generally depends on the recommendations on it from new analysts. Usually, stocks see an upward price movement on new analyst coverage compared to what was witnessed with a rating upgrade under an existing coverage. Positive recommendations — Buy and Strong Buy — generally lead to a significantly positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst gives a new recommendation on a company that has limited or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
Below, we have selected four stocks that have seen increased analyst coverage over the past few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (this will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should also consider other relevant parameters to make it foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are four of the 12 stocks that passed the screen:
Hibbett, Inc. (HIBB - Free Report) : Headquartered in Birmingham, AL, this company engages in the retail of athletic-inspired fashion products. The Zacks Rank #1 (Strong Buy) stock has surged 107.3% year to date, outperforming the industry’s 31.1% rally. Earnings estimates for the current year have moved up 5.3% over the past seven days. The company’s earnings are expected to grow 46.2% for the current year.
Integer Holdings Corporation (ITGR - Free Report) : Based in Plano, TX, this company operates as a medical device outsource manufacturer and currently carries a Zacks Rank #3 (Hold). The stock has gained 14.6% year to date compared with the industry’s 6.5% rally. The company’s earnings are expected to grow 39% for 2021. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cerevel Therapeutics Holdings, Inc. (CERE - Free Report) : Based in Cambridge, MA, this is a clinical-stage biopharmaceutical company. The stock currently carries a Zacks Rank #3 and has gained 42% year to date against the industry’s 8.3% decline. Loss estimates for 2021 have narrowed to $1.64 from $1.85 per share over the past 60 days.
A10 Networks, Inc. (ATEN - Free Report) : Headquartered in San Jose, CA, this company provides networking solutions and carries a Zacks Rank #3 at present. The stock has gained 15% year to date compared with the industry’s 50.5% rally. That said, the company’s earnings are expected to grow 18.2% for 2021, depicting solid prospects.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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New Analyst Coverage Puts Spotlight on These 4 Stocks
Coverage initiation on a stock by analyst(s) helps in making investment decisions. This is because analysts provide key information on a stock, which is of great value to investors. There’s no denying that the lack of consistency in information creates inefficiencies that might result in misinterpretation of stocks.
Initiation of coverage by analysts usually depicts increased investor inclination. Investors, on their part, often assume that there is something in the stock that has attracted analyst attention. In other words, they believe that the company coming under the radar definitely has some value that can be tapped into. At times, increased investor focus on a stock encourages analysts to take a closer look.
Then again, average change in broker recommendation is always preferred over a single recommendation change.
Impact on Price Movement
The price movement of a stock generally depends on the recommendations on it from new analysts. Usually, stocks see an upward price movement on new analyst coverage compared to what was witnessed with a rating upgrade under an existing coverage. Positive recommendations — Buy and Strong Buy — generally lead to a significantly positive price reaction than Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.
Now, if an analyst gives a new recommendation on a company that has limited or no existing coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
Below, we have selected four stocks that have seen increased analyst coverage over the past few weeks.
Screening Criteria
Number of Broker Ratings now greater than the Number of Broker Ratings four weeks ago (this will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago ('less than' means 'better than' four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy but one should also consider other relevant parameters to make it foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if volume isn’t enough, it will not attract individual investors).
Here are four of the 12 stocks that passed the screen:
Hibbett, Inc. (HIBB - Free Report) : Headquartered in Birmingham, AL, this company engages in the retail of athletic-inspired fashion products. The Zacks Rank #1 (Strong Buy) stock has surged 107.3% year to date, outperforming the industry’s 31.1% rally. Earnings estimates for the current year have moved up 5.3% over the past seven days. The company’s earnings are expected to grow 46.2% for the current year.
Integer Holdings Corporation (ITGR - Free Report) : Based in Plano, TX, this company operates as a medical device outsource manufacturer and currently carries a Zacks Rank #3 (Hold). The stock has gained 14.6% year to date compared with the industry’s 6.5% rally. The company’s earnings are expected to grow 39% for 2021. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cerevel Therapeutics Holdings, Inc. (CERE - Free Report) : Based in Cambridge, MA, this is a clinical-stage biopharmaceutical company. The stock currently carries a Zacks Rank #3 and has gained 42% year to date against the industry’s 8.3% decline. Loss estimates for 2021 have narrowed to $1.64 from $1.85 per share over the past 60 days.
A10 Networks, Inc. (ATEN - Free Report) : Headquartered in San Jose, CA, this company provides networking solutions and carries a Zacks Rank #3 at present. The stock has gained 15% year to date compared with the industry’s 50.5% rally. That said, the company’s earnings are expected to grow 18.2% for 2021, depicting solid prospects.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance