ER Talent
Some of analyst coverage is sooo lazy. Certain banks just are getting away with saying “oh we agree with this consensus” or “we don’t agree slightly!”, then slightly change price target to avoid being too far wrong. Evercore ISI seems like the best team by far…
Thanks for pointing that out
I've seen first hand analysts that check consensus first before publishing their own estimates for a new year for a covered company (e.g. FY26, 27).
Always followers, never leaders.
Don't think I've ever seen an analyst not check consensus before publishing their numbers
Someone has to publish first, ya know? Lol
Yeah you have to do that to at least make sure your numbers aren’t terribly off base. And if they are, you need to diagnose why. You’re stupid not to check
So what do you do when there's no numbers yet for a forward year?
A few things.
First of all, everyone always looks at consensus. It’s a necessary sanity check on numbers. Ideally, you won’t copy it directly … but the two benchmarks that investors often expect ER teams to opine upon are 1) consensus, and 2) the KPI “bogeys” that determine whether a company hit or missed performance expectations in a specific area. These KPIs can be things like growth, EBITDA, margin, or even things like utilization rate for managed healthcare or backlog orders for defense contractors.
ER teams aren’t really paid to do “deep research,” they’re paid to provide investors with information (“channel checks” and interpretations of what company management teams have said) to predict whether the companies will beat, miss, or hit these targets, and how, given investor positioning, how the stock will move in reaction to that.
Especially these days, with fewer analysts expected to cover more stocks, differentiated insights become more of an intermittent think piece and initiation content than something ER usually does. It’s usually “what do we think numbers will be, and how do we think the stock will move in reaction?” That … plus event planning, which allows these investors access to management to make their minds up for themselves.
As nice as it would be if the job was mostly in depth think pieces that investors derive intellectual value from, that’s just not what sell-side ER is (anymore? not old enough to know what it used to be).
Some would say that this differentiated analysis is the job of the buyside, and sell-side research is just a resource.
And if no one has published on that year yet?
Most models only show 2020-2028E. Consensus numbers usually go out to, at least, 2030, at this point. However, no one cares if your 2029-2035 numbers are “off” because those numbers are meaningless and not shown at this point. As time goes on, analysts better calibrate those distant future numbers.
After reading tons and tons of research, the best research to me usually includes a "PM insights" section, or giving a real opinion on skepticism or growth potential. Some colleagues have said to me: most buysiders only buy research to get access to executives. Also, I don't really think a lot of these buysiders are smart... One of them we met invested like $50 million into one of our coverage companies and didn't even know what they did lol. He was like: So tell me about your company...
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