Zacks.com Featured Highlights Include: JBGS, NWBI, THG, HEPA And HSII

For Immediate Release

Chicago, IL – December 23, 2019 - Stocks in this week’s article are JBG SMITH Properties (NYSE:JBGS) , Northwest Bancshares, Inc. (NASDAQ:NWBI) , The Hanover Insurance Group, Inc. (NYSE:THG) , Hepion Pharmaceuticals, Inc. (NASDAQ:HEPA) and Heidrick & Struggles International, Inc. (NASDAQ:HSII) .

5 Stocks in Focus as Analysts Initiate Coverage

As analysts are one of the most important information intermediaries in capital markets, initiation of coverage by them creates value for companies.

It is to be borne in mind that discrepancy in information creates inefficiencies that might result in the misinterpretation of stocks (over- or under-valued). Thus, initiation of coverage by analysts offers critical information on a stock.

Coverage initiation on a stock by analyst(s) 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 which can be tapped into.

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.

However, we have noticed that the average change in broker recommendation is preferred over a single recommendation change.

Analyst Coverage & Price Movement

Interestingly, the price movement is generally a function of the recommendations from new analysts. Stocks typically see an upward price movement with a new analyst coverage compared to what they witness with a rating upgrade under an existing coverage. Positive recommendations — Buy and Strong Buy — generally lead to more 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 over the last few weeks.

For the rest of this Screen of the Week article please visit Zacks.com at: Zacks Investment Research

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Written By: Zacks Investment Research