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The biggest challenge to emerging healthcare companies is the difficulty of obtaining research coverage to stimulate investor interest and asset manager access. Analyst coverage is a dominant variable in the investment decision. Communication to retail and securities professionals, asset managers and institutional advisors is crucial for share value and one of the key "sponsors" behind an investment decision. It is harder and harder for a emerging healthcare company to obtain research coverage through I Bank's since the sell-side finds it increasingly difficult to bridge the gap between the high costs of its research operations and deteriorating commissions from its cash equity sales and trading business. Analyst compensation, retention and ultimately coverage have been driven down by trading volumes; particularly at firms that don't have investment-banking businesses. As a result, some investment banks have exited the research business altogether based purely on economic rationale.
Research coverage of emerging healthcare companies' stock is the starting point where the "eventuality" of an investment decision begins. It's extremely time consuming for the "buy-side" to have to do primary research on large numbers of stocks that may well end up being 'passed' on. For this same reason quant screens are often used to identify small companies that may be attractive on paper, but may "ignore" compelling qualitative factors that might "dictate" an investment. Investors and shareholders need independent verification that emerging healthcare companies are meeting milestones and reaching regulatory goals. Scimitar improves communication and capitalization by analyzing and disseminating insightful, objective, thought-provoking analysis to the investing public.
Investors and shareholders review analyst reporting as one major source of verification that emerging healthcare companies are meeting milestones and reaching established goals. When you think of a person whose opinion counts most for a company, the CEO, Chairman or CFO probably come to mind. Unfortunately, most sophisticated investors will not take management's word for a company's prospects.
The analyst who covers the stock, however, ranks right up there.
Investors and shareholders need independent verification that emerging healthcare companies are meeting milestones and reaching established goals.
Evaluating the relative performance can be an important tool in portfolio attraction and retention. Asset managers rarely act alone when investing in companies without adequate "sponsorship". Insightful intelligence and thorough comparable analysis can assist in measuring investment candidates while benchmarking milestones and capitalization tables help in illustrating how some companies prioritize and fulfill objectives while executing value creation.
Many emerging healthcare stocks have largely underperformed in recent years; so now is a good time to create coverage of your stock to stimulate investment. After all, health-care spending is rising at record rates. Moreover, many emerging healthcare companies have enormous potential in their research programs.
Scimitar Equity's mission is unchanged from the day we were founded: that is to provide objective, comprehensive and timely equity research. Unlike our larger competitors that provide research, underwrite and trade securities; our interests remain fully aligned with those of our clients in pursuit of the simple objective of defining the short, near and long term potential for an investment decision. Now in our fifth year, we believe we have become a major independent alternative to investment banks for research and access to the investor population.
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