For Immediate Release
Chicago, IL – July 18, 2019 - Stocks in this week’s article are AllianceBernstein Holding L.P. (AB - Free Report) , LiqTech International, Inc. (LIQT - Free Report) , Amadeus IT Group, S.A. (AMADY - Free Report) , Plantronics, Inc. (PLT - Free Report) and Aerojet Rocketdyne Holdings, Inc. (AJRD - Free Report) .
5 Stocks in Focus as Analysts Initiate Coverage
Coverage initiation on a stock by analyst(s) helps in interpreting information pertaining to capital markets, creating value for investors. Lack of information creates inefficiencies that might trigger misinterpretation of stocks (over- or under-valued).
In fact, coverage initiation 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 microscope definitely has some value.
Obviously, stocks are not arbitrarily chosen to cover. New coverage on a stock usually reflects an encouraging future envisioned by the analyst(s). At times, increased investor focus on a stock motivates analysts to take a closer look at it.
Notably, the average change in broker recommendation is preferred over a single recommendation change.
Influence on Stock Price
It is interesting to note that the price impact of analyst initiation depends on the initial recommendation. Positive recommendations — Buy and Strong Buy — generally lead to a significantly positive price reaction in comparison to Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation. Meanwhile, 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.
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.
For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/443586/5-stocks-in-focus-as-analysts-initiate-coverage
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