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New Analyst Coverage Puts Spotlight on These 3 Stocks
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Investors depend on research work provided by analysts as they fear that a lack of information while exploring on their own might trigger errors. Here, analysts play a vital intermediary role as they have extensive access to relevant data.
Applied Industrial Technologies, Inc. (AIT - Free Report) , Kyndryl Holdings, Inc. (KD - Free Report) and NewtekOne, Inc. (NEWT - Free Report) are some stocks that have seen new analyst coverage lately and are therefore expected to attract investors' attention.
Coverage initiation of a stock by analyst(s) usually portrays higher investor inclination. Investors, on their part, often assume that there is something special in a stock to attract analysts to cover it. In other words, they believe that the company coming under the microscope definitely has some value.
Obviously, stocks are not randomly chosen to cover. New coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investors’ focus on a stock motivates analysts to take a closer look at it. After all, who doesn’t love to produce something that is already in demand? Hence, we often find that analysts’ ratings on newly added stocks are more favorable than their ratings on continuously covered stocks.
It is needless to say, the average change in broker recommendation is more preferable than a single recommendation change.
How Does Analyst Coverage Influence Stock Price?
The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what is 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 very few 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.
So, it’s a good strategy to bet on stocks that have seen increased analyst coverage.
Below, we have selected three 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 the volume isn’t enough, it will not attract individual investors).
Here are three among the four stocks that passed the screen:
Applied Industrial Technologies: Based in Cleveland, OH, AIT is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies.
AIT currently carries a Zacks Rank #1 (Strong Buy). The stock has gained 53.1% over the past year, outperforming the industry’s 6.7% rise. Earnings estimates for fiscal 2023 have increased to $8.34 per share from $8.01 per share over the past seven days. The estimated figure implies 26.8% growth from the year-ago period, thanks to investments across the U.S. manufacturing sector and strong automation demand. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kyndryl Holdings: This company operates as a technology services provider and is headquartered in New York. KD provides IT infrastructure services worldwide.
KD currently carries a Zacks Rank #2. The stock has declined 13.2% over the past year, faring better than the industry’s 27.5% decline. Earnings estimates for fiscal 2024 indicate 80.3% growth from the year-ago period.
NewtekOne: Headquartered in Boca Raton, FL, NEWT is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States.
NEWT currently carries a Zacks Rank #3 (Hold). The stock has gained 19.4% over the past three months, faring better than the industry’s 10.2% rise. Earnings estimates for 2023 indicate 12% growth from the year-ago period.
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 3 Stocks
Investors depend on research work provided by analysts as they fear that a lack of information while exploring on their own might trigger errors. Here, analysts play a vital intermediary role as they have extensive access to relevant data.
Applied Industrial Technologies, Inc. (AIT - Free Report) , Kyndryl Holdings, Inc. (KD - Free Report) and NewtekOne, Inc. (NEWT - Free Report) are some stocks that have seen new analyst coverage lately and are therefore expected to attract investors' attention.
Coverage initiation of a stock by analyst(s) usually portrays higher investor inclination. Investors, on their part, often assume that there is something special in a stock to attract analysts to cover it. In other words, they believe that the company coming under the microscope definitely has some value.
Obviously, stocks are not randomly chosen to cover. New coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investors’ focus on a stock motivates analysts to take a closer look at it. After all, who doesn’t love to produce something that is already in demand? Hence, we often find that analysts’ ratings on newly added stocks are more favorable than their ratings on continuously covered stocks.
It is needless to say, the average change in broker recommendation is more preferable than a single recommendation change.
How Does Analyst Coverage Influence Stock Price?
The price movement of a stock is generally a function of the recommendations on it from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what is 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 very few 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.
So, it’s a good strategy to bet on stocks that have seen increased analyst coverage.
Below, we have selected three 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 the volume isn’t enough, it will not attract individual investors).
Here are three among the four stocks that passed the screen:
Applied Industrial Technologies: Based in Cleveland, OH, AIT is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies.
AIT currently carries a Zacks Rank #1 (Strong Buy). The stock has gained 53.1% over the past year, outperforming the industry’s 6.7% rise. Earnings estimates for fiscal 2023 have increased to $8.34 per share from $8.01 per share over the past seven days. The estimated figure implies 26.8% growth from the year-ago period, thanks to investments across the U.S. manufacturing sector and strong automation demand. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kyndryl Holdings: This company operates as a technology services provider and is headquartered in New York. KD provides IT infrastructure services worldwide.
KD currently carries a Zacks Rank #2. The stock has declined 13.2% over the past year, faring better than the industry’s 27.5% decline. Earnings estimates for fiscal 2024 indicate 80.3% growth from the year-ago period.
NewtekOne: Headquartered in Boca Raton, FL, NEWT is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States.
NEWT currently carries a Zacks Rank #3 (Hold). The stock has gained 19.4% over the past three months, faring better than the industry’s 10.2% rise. Earnings estimates for 2023 indicate 12% growth from the year-ago period.
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