Zacks.com featured highlights include Grupo Supervielle, Emergent BioSolutions and Innodata

Barchart · 10/15 09:46

For Immediate Release

Chicago, IL – October 15, 2024 – Stocks in this week’s article are Grupo Supervielle S.A. SUPV, Emergent BioSolutions Inc. EBS and Innodata Inc. INOD.

3 Stocks Poised for Better Returns with New Analyst Coverage

The initiation of coverage by new analysts can provide substantial advantages to investors and exert a notable impact on financial markets. Analysts typically possess specialized knowledge and expertise in particular industries or sectors. Through thorough research and analysis, they offer investors critical insights into a company's financial health, growth potential, competitive standing, and industry trends — insights that are often difficult for individual investors to acquire independently.

Grupo Supervielle S.A., Emergent BioSolutions Inc. and Innodata Inc. are three stocks that have witnessed new analyst coverage lately. These are, therefore, expected to attract investor attention.

Coverage initiation on 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 holds some value.

Do analysts create value for companies by initiating coverage? Of course, they do because they play an important intermediary role with their extensive access to relevant data. Many investors have immense faith in analysts' research as they fear that a lack of information might trigger inefficiencies.

Obviously, stocks are not randomly chosen to cover. A new coverage on a stock usually reflects a reassuring future envisioned by the analyst(s). At times, increased investor focus on a stock motivates analysts to take a closer look at it. After all, who doesn't like 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.

Needless to say, the average change in broker recommendation is preferable to a single recommendation change.

Impact on Stock Price

The price movement of a stock is generally a function of the recommendations from new analysts. Stocks typically see an upward price movement with 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 a significantly positive price reaction compared with Hold recommendations. On the contrary, analysts hardly initiate coverage with a Strong Sell or Sell recommendation.

Now, if an analyst issues a new recommendation on a company that has very little or no existing coverage, investors start paying more attention to it. Also, any further 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.

Here are three out of the five stocks that passed the screen:

Grupo Supervielle S.A.: This is a Buenos Aires, Argentina-based financial services holding company. SUPV currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

SUPV shares have gained 31.3% over the past three months against the industry's 10.3% decline. Earnings per share (EPS) estimates for SPUV have moved north to $1.29 from $1.20 for 2024 in the past 60 days, depicting analysts' optimism over the company's prospects. The estimated figure indicates 59.3% growth from a year ago.

Emergent BioSolutions: Headquartered in Gaithersburg, MD, this is a life sciences company. EBS currently has a Zacks Rank #2 (Buy).

Emergent BioSolutions' shares have lost 22.6% over the past three months, underperforming the industry's 1% rise. Yet, the bottom-line estimates for EBS have improved to a loss of $1.30 per share from a loss of $1.98 per share for 2024 in the past 30 days. It also has a favorable VGM Score of B.

Innodata: Based in Ridgefield Park, NJ, this company operates as a global data engineering company. INOD currently has a Zacks Rank #3 (Hold).

INOD shares have lost 17.9% over the past three months compared with the industry's 9.6% rise. Nonetheless, EPS estimates for 2024 have moved north to 21 cents from 18 cents in the past 60 days. Innodata also has a favorable VGM Score of B.

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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2349685/3-stocks-poised-for-better-returns-with-new-analyst-coverage

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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Emergent Biosolutions Inc. (EBS): Free Stock Analysis Report
 
Innodata Inc. (INOD): Free Stock Analysis Report
 
Grupo Supervielle S.A. (SUPV): Free Stock Analysis Report

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