In the fast-moving world of investing, few events generate as much buzz as fresh analyst coverage. Whether it’s an emerging small-cap stock gaining attention or a well-known company being reassessed, new coverage often sparks market interest. These reports do more than just shift investor sentiment—they improve liquidity and validate investment theses, making them a key market catalyst.
But why is new analyst coverage so impactful? For investors, this attention can signal fresh opportunities. The added visibility often leads to price movements, and in some cases, it highlights a company’s long-term growth potential. Whether you’re a short-term trader or a long-term investor, understanding the ripple effects of new analyst coverage can give you a decisive edge in navigating the market.
Two stocks that have recently come under new analyst coverage are Orion Group Holdings, Inc. (ORN – Free Report) and Amentum Holdings, Inc. (AMTM – Free Report) . As a result, they are likely to draw more investor attention in the coming weeks.
Let’s dive deeper into why this market development deserves your focus.
The Power of Analyst Coverage
When analysts at leading firms initiate coverage on a stock, they bring with them a network of institutional clients and comprehensive financial analysis. They are often experts in specific industries or sectors, leveraging their specialized knowledge to conduct in-depth research and analysis. Analysts provide investors with crucial insights into a company’s financial performance, growth prospects, competitive position, and industry dynamics—information that can be challenging for individual investors to obtain on their own.
Do analysts add value to companies by initiating coverage? Absolutely. Their role as intermediaries grants them access to a wealth of relevant data, which they refine into actionable insights. Many investors rely heavily on analysts’ research, recognizing that a lack of information could lead to market inefficiencies.
Stocks selected for coverage are not chosen arbitrarily. New coverage generally reflects the analyst’s confidence in the company’s prospects. Sometimes, heightened investor interest in a particular stock prompts analysts to focus on it, aligning their efforts with market demand. Consequently, ratings for newly covered stocks often tend to be more favorable compared to those of stocks that are already under continuous coverage.
Furthermore, a shift in the average broker recommendation holds more significance than an isolated recommendation change. When an analyst issues a recommendation for a company with minimal or no existing coverage, it often captures investors’ attention. This, in turn, can attract portfolio managers to take positions in the stock, as additional information surfaces.
The Effect of Analyst Coverage on Stock Performance
Analyst coverage can significantly influence stock performance, often triggering immediate price reactions. Positive ratings may attract bullish investors, while neutral or negative ratings can prompt sell-offs. Over time, consistent positive coverage can enhance investor confidence and boost a stock’s valuation. Conversely, new coverage that reveals risks can dampen investor enthusiasm and weigh on performance.
Overall, new analyst coverage acts as a spotlight, bringing attention to stocks that might otherwise go unnoticed. Whether it’s uncovering a hidden gem or gaining new insights into a familiar name, these reports can be a valuable tool for investors.
Are there newly covered stocks on your radar? Now might be the perfect time to dig deeper and uncover your next winning investment.
So, it’s a good strategy to bet on stocks that have seen increased analyst coverage over the last few weeks.
Screening Criteria
The Number of Broker Ratings is 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 two out of the three stocks that passed the screen:
Orion Group: Based in Houston, TX, this company operates as a specialty construction company in the building, industrial, and infrastructure sectors. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ORN shares have gained 51.9% in the past three months compared with the industry’s 18.4% rise. The Zacks Consensus Estimate for ORN’s 2025 earnings per share (EPS) depicts 185% year-over-year growth.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Amentum: Based in Chantilly, Virginia, this company provides engineering and technology solutions. The company currently carries a Zacks Rank #3.
AMTM shares have lost 27.5% in the past three months against the industry’s 7.8% growth. The Zacks Consensus Estimate for AMTM’s fiscal 2025 EPS indicates 4.5% year-over-year growth. It has a VGM Score of A.
You can get the remaining 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 trading. Further, you can also create your 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 of 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
