Stock analysts are financial experts playing a pivotal role in the investment world. These professionals specialize in evaluating and forecasting the performance of various stocks within the market. They scrutinize company financials, industry trends, and economic indicators and form opinions about the potential of specific stocks. By providing insights and recommendations, analysts assist investors in making decisions. Through their research and ratings, analysts shape market perceptions and can influence the overall sentiment towards particular stocks or sectors.
Upside And Downside
The current sentiment among analysts regarding Greek stocks is predominantly bullish, although there is a notable lack of market coverage for many companies. The Athens General Index comprises 60 stocks, but only 28 of them are currently being analyzed by experts. Within this limited coverage, there are a total of 234 different analyst ratings, with a significant majority of them being buy ratings (187) and only 6 sell ratings. This optimistic outlook is not surprising given that the Athens General Index has shown remarkable growth, up over 40% this year.
To gain further insight, we can examine the gap between current stock prices and the analysts' 12-month target prices. Such a comparison reveals which stocks have already reached their target price, indicating limited upside potential, and which ones are still below expectations. Among those that have already surpassed their target price are HELLENiQ Energy (ELPE), Hellenic Exchanges (EXAE), and Cenergy Holdings (CENER). Additionally, there are companies shaded in red/orange that are closest to their target prices and those in green that are farthest below their expected analyst target price, such as ElvalHalcor (ELHA) and GEKTerna (GEKTERNA).
Not Enough Coverage
However, one concerning aspect is the insufficient market coverage. As mentioned earlier, only 28 out of 60 stocks have research coverage from at least one analyst. This means that more than half the stocks in the index have no coverage, leaving a significant portion of the Greek market without attention from analysts. Notably, only the largest stocks on the ATHEX receive coverage, with some being analyzed by multiple analysts, suggesting it is quite top heavy. Twelve companies have at least 10 analysts covering their stock (see table above), while 16 have coverage from 1 to 9 analysts.
There appears to be a correlation between returns this year and stronger coverage, potentially indicating that large investors, especially institutions, and other market participants show more interest in stocks with at least some level of coverage. Consequently, this increased interest could be driving up the prices of the covered stocks relative to those with less coverage.
Moreover, the lack of market coverage reveals a larger issue – the general apathy toward the Greek market. When compared to other indices, such as the FTSE-100 where almost all stocks are covered, the disparity becomes evident. The insufficient coverage not only disadvantages less-covered companies by reducing investor interest but also reflects a lack of enthusiasm for the Greek market as a whole.
Filling The Gap: EBRD Research Coverage Project
To address this coverage gap, the Athens Exchange, in collaboration with the European Bank for Reconstruction and Development (EBRD), has initiated the EBRD Research Coverage Project. This project aims to increase research coverage by supporting research on Athex listed companies that currently have little to no analyst coverage. The program covers the costs for researchers willing to undertake this essential work. For more information on this project, please refer to the link.
By encouraging more comprehensive research and analysis, the Greek market can foster greater investor interest and participation, leading to a more vibrant and attractive investment landscape for both domestic and international investors.
Great coverage, thank you!