3 Stocks in the Limelight on New Analyst Coverage
Analysts' coverage initiations unearth new information on stocks that are of interest to investors. These unveil more data on stocks for which reports are initiated, reduce information asymmetry about the same and create more demand for the companies’ common stocks.
New analyst coverage reveals extensive data on stocks for investors. As analysts are privy to vital information, which is crucial for investment decisions, they are much relied on as lack of information creates chances of misinterpretation (over- or under-valued).
Disc Medicine Opco Inc IRON, Westamerica Bancorporation WABC and Enliven Therapeutics, Inc. ELVN are three stocks that have witnessed new analyst coverage lately. These are, therefore, expected to attract investor attention.
Analysts don’t add a stock to their coverage randomly. New coverage on a stock is usually the result of huge investor focus on it or its prospects.
Interestingly, stocks typically see an upward price movement with new analyst coverage compared to what they witness with the continuation of existing analyst coverage. Of course, the price movement depends on the recommendations from the new analysts. Positive recommendations — Buy and Strong Buy — lead to a huge incremental price reaction than Strong Sell, Sell or Hold recommendations.
Moreover, if an analyst provides a new recommendation on a company that has limited or no analyst coverage, investors start paying more attention to it. Also, any new information attracts portfolio managers to build a position in the stock.
However, one should preferably look for the average change in broker recommendation rather than a single recommendation change. Then again, an upgrade, an initiation or even increased coverage is equally important.
Keeping this in mind, it’s a good strategy to focus on the number of analyst recommendations that have increased over the last few weeks.
Below, we have 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 stocks that passed the screen:
Disc Medicine Opco: Based in Watertown, MA, this clinical-stage biotechnology company is engaged in the discovery, development and commercialization of novel treatments for patients suffering from serious hematologic diseases.
IRON currently carries a Zacks Rank #2 (Buy). The stock has gained 29% over the past six months, outperforming the industry’s 4.3% growth. Loss estimates for 2023 have narrowed to $3.11 per share from $3.71 per share over the past 60 days.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Westamerica Bancorporation: Based in San Rafael, CA, this company operates as a bank holding company for the Westamerica Bank.
WABC currently carries a Zacks Rank #3 (Hold). The stock has lost 20.9% over the past six months, faring better than the industry’s 45.6% decline. Earnings estimates for 2023 indicate 34.4% growth from the year-ago period. This company surpassed earnings estimates in three of the trailing four quarters but met on one occasion, with the average surprise being 10.5%.
Enliven Therapeutics: Based in Boulder, CO, this is a clinical-stage biopharmaceutical company focused on the discovery and development of small molecule inhibitors for cancer patients.
ELVN currently carries a Zacks Rank #3. The stock has gained 109.7% over the past six months, underperforming the industry’s 1.4% growth. Loss estimates for 2023 have narrowed to $1.91 per share from $2.19 per share over the past 30 days.
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Westamerica Bancorporation (WABC) : Free Stock Analysis Report
Disc Medicine, Inc. (IRON) : Free Stock Analysis Report
Enliven Therapeutics, Inc. (ELVN) : Free Stock Analysis Report
