When a stock receives new analyst coverage, it often marks a pivotal moment for the company and can signal opportunities—or risks—for investors. Analyst coverage refers to financial experts, typically employed by investment banks or research firms, initiating or expanding their research on a company’s stock. These analysts provide reports that include ratings (buy, hold, or sell), price targets and key insights into a company’s performance, strategy and market potential.
EMCOR Group, Inc. (EME – Free Report) , Limbach Holdings, Inc. (LMB – Free Report) , EZCORP, Inc. (EZPW – Free Report) and Laureate Education, Inc. (LAUR – Free Report) are four stocks that have witnessed new analyst coverage lately. These are, therefore, expected to attract investor attention.
Here’s Why New Analyst Coverage Matters
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.
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. Again, 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.
Impact on Stock Performance
The announcement of new coverage can cause immediate fluctuations in stock price. Positive ratings can attract bullish investors, while neutral or negative ratings may spark sell-offs. Meanwhile, consistent, positive coverage from multiple analysts can contribute to sustained investor confidence, potentially leading to higher valuations. Conversely, if the coverage reveals previously unrecognized risks, it can hinder long-term performance.
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 four out of the five stocks that passed the screen:
EMCOR Group: Headquartered in Norwalk, CT, this company is one of the leading providers of mechanical and electrical construction, industrial and energy infrastructure, as well as building services. EME stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EME shares have gained 38.4% over the past three months, outperforming the industry’s 33% rise. Earnings per share (EPS) estimates for EME have moved north to $20.74 (from $19.50) for 2024 and to $22.24 (from $21.50) for 2025 in the past 30 days, depicting analysts’ optimism over the company’s prospects. Estimated figures indicate 55.5% and 7.2% growth for 2024 and 2025 from a year ago, respectively. It carries a VGM Score of B.
Limbach: This Warrendale, PA-based company operates as a building systems solution provider. The company currently carries a Zacks Rank #1.
LMB shares have gained 55.6% over the past three months, outperforming the industry’s 0.5% rise. EPS estimates for LMB have moved north to $2.54 (from $2.43) for 2024 and to $3.02 (from $2.81) for 2025 in the past 30 days. The estimated figures indicate 44.3% and 19.1% growth for 2024 and 2025, respectively, from a year ago.
EZCORP: Based in Austin, TX, this company provides pawn services in the United States and Latin America. The company currently carries a Zacks Rank #2 (Buy).
EZPW shares have gained 2.9% over the past three months compared with the industry’s 20.2% rise. EPS estimates for EZPW have moved north to $1.25 (from $1.23) for fiscal 2025 in the past seven days. The estimated figures indicate 11.6% growth for fiscal 2025 from a year ago. It has a VGM Score of A.
Laureate Education: Based in Miami, FL, this company is a degree-granting higher education provider. The company currently carries a Zacks Rank #2.
LAUR shares have gained 25.9% over the past three months, outperforming the industry’s 0.5% rise. EPS estimates for LAUR have moved north to $1.42 (from $1.41) for 2024 and to $1.44 (from $1.43) for 2025 in the past 30 days. The estimated figures indicate 91.9% growth for 2024 and 1.4% for 2025 from a year ago. It has a VGM Score of A.
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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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