{"id":8699,"date":"2023-08-03T13:17:07","date_gmt":"2023-08-03T11:17:07","guid":{"rendered":"https:\/\/hear-ir.com\/?p=8699"},"modified":"2023-12-20T20:58:25","modified_gmt":"2023-12-20T19:58:25","slug":"consensus-and-expectations","status":"publish","type":"post","link":"https:\/\/hear-ir.com\/it\/consensus-and-expectations\/","title":{"rendered":"CONSENSUS AND EXPECTATIONS"},"content":{"rendered":"\n

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CONSENSUS AND EXPECTATIONS<\/h1>\n\n\n\n

Using consensus to better manage expectations<\/h1>\n\n\n\n

Do consensus estimates accurately reflect operating performance?<\/h1>\n\n\n\n

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SUMMER BLOG<\/strong><\/p>\n\n\n\n

We are pleased to share an interesting article from <\/em>IR Society Conference 2023: DYNAMIC IR \u2013 STAYING AUTHENTIC & MANAGING ON-GOING STRUCTURAL CHANGE<\/strong><\/p>\n\n\n\n

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Analyst models certainly have a relevant impact on market sentiment and on investors’ perceptions of a company. Given the vast range of invesments opportunities, institutional investors often rely on sellside research,<\/strong><\/p>\n\n\n\n

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How consensus manages the expectations of the investment community<\/h2>\n\n\n\n

For IROs, maintaining an ongoing and constructive relationships with investment banking and independent research analysts is critical. The aggregation of analysts\u2019 models, provides a quantifiable market perspective of the company, offering insights for IR teams on how the investment community views the company.<\/p>\n\n\n\n

No other source is as broad and deep for detailed analysis<\/strong><\/p><\/blockquote>\n\n\n\n

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The market\u2019s view of a company\u2019s business drivers<\/strong><\/p>\n\n\n\n

Traditional consensus metrics mostly focus on outcomes like revenue, net income, and earnings per share (EPS). In addition, cash flow and debt-related KPIs are even more relevant.<\/p>\n\n\n\n

Then, a detailed examination of the analysts’ models and the detailed forecasts contained in them, however, unveils a comprehensive understanding of how analysts believe those outcomes will be achieved. The resulting data reveals the driving forces behind the business, providing an invaluable market perspective that a company and its IR team can use in the future. Analyst model forecasts significantly influence market sentiment and shape investors’ perceptions of a company. Given the vast array of investible opportunities, institutional investors often rely heavily on sellside research.<\/p>\n\n\n\n

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A broad spread of forecasts on a key business driver could signal the need for more transparency or improved guidance on the part of the company to clarify a point of confusion, or could reflect significant differences in analyst opinions on a fundamental issue. This information enables IR teams to proactively address concerns with specific analysts and to quantify any investment controversies that may drive investor behaviour.<\/h2>\n\n\n\n
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The importance of timely responses<\/strong><\/p>\n\n\n\n

For an IR team, accurately tracking critical changes in key forecasts can be a herculean task, considering the ever-increasing size and complexity of analyst models and the frequency of revisions.<\/p>\n\n\n\n

Beyond earnings: an ongoing process<\/strong><\/p>\n\n\n\n

According to a Visible Alpha<\/a> study, while a significant percentage of analyst revisions (32%) occur within a day of an earnings announcement, the flow of information from analysts continues during the rest of the quarter. Almost 50% of analyst revisions are made between two weeks after earnings and two weeks before the next reporting. This study underscores the substantial value for IR teams in keeping a constant finger on the pulse of ongoing analyst updates.<\/p>\n\n\n\n

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Real-time consumption of sell-side models and forecasts provides an invaluable tool for staying ahead of the curve. Outdated snapshots of analyst sentiment, or high-level forecasts that do not illuminate the market\u2019s changing view of their company\u2019s key drivers, cannot serve the interests of IR teams in a constantly evolving information landscape. <\/p>\n\n\n\n

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