Friday, December 09, 2005 - 'Consensus estimate' may be from one analyst

USA Today ran an interesting look at analyst coverage. Many stocks have a surprisingly small analyst following. - 'Consensus estimate' may be from one analyst: "Currently, more than half the 8,416 public companies have no analyst coverage, says Ashwani Kaul, chief spokesman for Reuters Estimates. An additional 7% of publicly traded companies are covered by just one analyst.

Most of the single-covered stocks are small, with an average market value of $284 million, Kaul says. But the ranks still include some well-known companies such as 1-800-Contacts, A.T. Cross and Rocky Mountain Chocolate Factory."

As analysts play roles in reducing information asymmetries and even in control agency costs, the relative scarcity of analysts brings up interesting questions: how do returns vary with coverage? How about agency costs?


Marco Terry said...

A terrible fact of "public" corporate life, is that most small public companies have to PAY for unbiased (yeah... sure.... maybe...) analyst coverage.

Brad McCall said...

Well... people should learn that even when there is coverage, it isn't Gospel.