The 2025 stock market has been turbulent due to geopolitical tensions, weaker consumer confidence, and trade disputes. Trump's strict tariffs have added to global uncertainty. In AI, DeepSeek has emerged as a strong competitor to OpenAI, Google DeepMind, and Anthropic, disrupting the industry with cost-efficient models. Meanwhile, inflation concerns persist, with the Conference Board’s February consumer confidence index seeing its steepest drop since August 2021.
Amid market instability, new analyst coverage helps investors navigate changing conditions by identifying opportunities and risks. Fresh coverage often boosts liquidity, validates investment theses, and influences stock prices.
Two stocks recently gaining analyst attention are Shore Bancshares, Inc. SHBI and Ethan Allen Interiors Inc. ETD, likely drawing increased investor interest.
Why Analyst Coverage Commands Attention
When analysts at leading firms initiate coverage on a stock, they bring with them a network of institutional clients and comprehensive financial analysis. They are often experts in specific industries or sectors, leveraging their specialized knowledge to conduct in-depth research and analysis. Analysts provide investors with crucial insights into a company’s financial performance, growth prospects, competitive position, and industry dynamics—information that can be challenging for individual investors to obtain on their own.
Do analysts add value to companies by initiating coverage? Absolutely. Their role as intermediaries grants them access to a wealth of relevant data, which they refine into actionable insights. Many investors rely heavily on analysts’ research, recognizing that a lack of information could lead to market inefficiencies.
Stocks selected for coverage are not chosen arbitrarily. New coverage generally reflects the analyst’s confidence in the company’s prospects. Sometimes, heightened investor interest in a particular stock prompts analysts to focus on it, aligning their efforts with market demand. Consequently, ratings for newly covered stocks often tend to be more favorable compared to those of stocks that are already under continuous coverage.
Furthermore, a shift in the average broker recommendation holds more significance than an isolated recommendation change. When an analyst issues a recommendation for a company with minimal or no existing coverage, it often captures investors' attention. This, in turn, can attract portfolio managers to take positions in the stock as additional information surfaces.
How Analyst Coverage Impacts Stock Performance
Analyst coverage can significantly impact stock performance by triggering various market reactions. The announcement of new coverage can cause immediate fluctuations in stock prices. Positive ratings can attract bullish investors, while neutral or negative ratings may spark sell-offs. Meanwhile, consistent, positive coverage from multiple analysts can contribute to sustained investor confidence, potentially leading to higher valuations. Conversely, if the coverage reveals previously unrecognized risks, it can hinder long-term performance.
Overall, new analyst coverage can act as a spotlight, illuminating stocks that might otherwise go unnoticed. Whether you’re discovering a hidden gem or gaining a fresh perspective on a well-known company, these reports can be a powerful addition to your investment toolkit.
Are there newly covered stocks on your radar? Now might be the perfect time to dig deeper and uncover your next winning investment.
So, it’s a good strategy to bet on stocks that have seen increased analyst coverage over the last few weeks.
Screening Criteria
The Number of Broker Ratings is greater than the Number of Broker Ratings four weeks ago (this will shortlist stocks that have recent new coverage).
Average Broker Rating less than Average Broker Rating four weeks ago (“less than” means “better than” four weeks ago).
Increased analyst coverage and improving average rating are the primary criteria of this strategy, but one should also consider other relevant parameters to make it foolproof.
Here are the other screening parameters:
Price greater than or equal to $5 (as a stock below $5 will not likely create significant interest for most investors).
Average Daily Volume greater than or equal to 100,000 shares (if the volume isn’t enough, it will not attract individual investors).
Here are two stocks that passed the screen:
Shore Bancshares: Based in Easton, MD, this company operates as a bank holding company for Shore United Bank, N.A. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SHBI shares have gained 34.5% in the past year compared with the industry’s 27.2% rise. The 2025 earnings per share (EPS) estimate has increased to $1.59 from $1.46 over the past 30 days, depicting analysts’ optimism over the company’s prospects. This company surpassed earnings estimates in all the trailing four quarters, with the average surprise being 22.2%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Ethan Allen Interiors: Based in Danbury, CT, this company operates as an interior design firm, and manufacturer and retailer of home furnishings in the United States and internationally. The company currently carries a Zacks Rank #2 (Buy).
ETD shares have lost 10.9% in the past year against the industry’s 3.7% growth. The fiscal 2025 EPS estimate has increased to $2.32 from $2.30 over the past 30 days. Again, it carries an impressive Value Score of A.
You can get the remaining stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your trading. Further, you can also create your strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial of the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
