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Cultivating Incremental Sell-Side Analyst Coverage

A small-cap client was followed by a below-average number of sell-side analysts despite possessing compelling growth characteristics. The client’s positive cash flow translated into a limited need for financing and thus contributed to a narrower scope of interest in coverage.

Westwicke Partners’ Role

Our challenge was to help the client secure additional coverage by raising the client’s profile among a sub-sector of small-cap analysts, particularly those whose firms allowed them the latitude to cover interesting gems even though they may lack the revenue potential of a possible corporate finance client.

  • Westwicke identified a subset of 8 to 10 of the leading small-cap analysts in the sector whose existing coverage lists not only allowed for additional capacity but whose research styles fit the client’s high-growth and unique medical sector characteristics.
  • Westwicke provided all the contact information and a plan of attack for management to begin the process of meeting and cultivating relationships with each analyst.
  • Westwicke facilitated introductions to all the analysts based largely on our pre-existing relationships with these analysts, and we also engaged in independent discussions with the analysts about the client to help educate them on the investment merits of the company. In short, we helped to put the client on each analyst’s radar screen and worked with the analysts to begin their preliminary due diligence process by providing them with insights into the company.
  • Westwicke facilitated interactions between the client and the targeted analysts, such as setting up introductory meetings and conference calls as well as offering up non-deal road shows to the prospective analysts.
  • Westwicke periodically checked in with the targeted analysts to make sure they were receiving all the information they needed to stay current on the story and to continue to nurture the analyst-client relationship.

Result

Typically, a goal of adding one to two new analysts in a 12 to 18 month time frame has proven to be achievable when we and the client work synergistically to engage in targeted analyst outreach and relationship cultivation. The client was successful in garnering coverage from two new sell-side analysts within the first year of implementing our strategy, and it continues to see coverage expand through ongoing efforts.

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