For public healthcare companies and those on the road to an initial public offering (IPO), crafting an effective investor relations (IR) program is essential, and can significantly enhance the investment appeal of your company. Whether your company’s investor relations efforts are new – say, the result of going public – or just in need of a fresh perspective (let’s call it a “reset”), it’s important to keep in mind a few core elements as you plan.
The Westwicke Blog is designed to deliver information and insights into the ever-changing world of investor relations and the capital markets, with a specific focus on the healthcare industry.
2013 was an incredible year for the United States initial public offering (IPO) market — the best since 2000. Of the 222 companies that went public, a record 55 companies (or 24.7 percent) were from healthcare, which experienced more IPOs than any other sector. Will healthcare break the 55 IPOs record in 2014? Time will tell.
Sell-side analysts hold big sway with the investment community, and can help your company’s potential to attract investors. To work in your favor, analysts must know the ins and outs of why your company or product represents the next best thing in the marketplace. They also need confidence in your company’s potential to make it to the next level.
While the reputation of sell-side analysts came under fire with conflict of interest stories this past decade, and new regulations helped level the playing field, analysts continue to play powerful roles in the marketplace, and companies are wise to nurture strong relationships. What’s it like in today’s market from the sell-side point of view? And how can you better your chances of making it on analysts’ coverage lists and receiving a coveted “Buy” rating? Continue Reading
When designing and maintaining an investor relations strategy, how important is your company website? Pretty important, it turns out. A Thomson Reuter’s 2012 survey showed that 84% of institutional investors use a company’s IR website as part of their research process. Importantly, 74% of respondents also indicated that the IR website has an impact on their perception of the company and its IR program.
First impressions are extremely important, and your website is often your company’s first chance to make an impression. Here are some key places investors go on your website, and some tips on how you can make their experience a valuable one (for them and for you):
- Make the site easy to navigate. If a website is not laid out logically and clearly, visitors will become frustrated and give up looking. Key information – such as presentations, press releases, SEC filings and other news – needs to be displayed prominently, allowing potential investors to get to it quickly. This doesn’t just apply to the investor relations section but the entire website. Don’t make it hard for investors to learn about your company and products.
- Make sure all info is up to date and accurate. Too many times, sites continue to display information that is wrong, or outdated. This can lead investors to assume that IR is not important to the company. Continue Reading
Management teams and IR professionals tend to take stock rating downgrades personally. While a downgrade may sting on the day of, in the long run all stocks’ ratings are subject to fluctuations – both up and down. To get a better feel for how the buy-side reacts to ratings downgrades, we reached out to both buy-side analysts and portfolio managers to get some real-time feedback. The conclusion? In general, the buy-side really doesn’t care about the rating on a particular stock. The representatives we spoke to clearly are more interested in learning as much as possible about a company and are less interested in a stock’s label.
Following are ten direct quotes about this topic that speak to why analyst ratings really don’t matter:
- “I don’t care about analyst ratings. I do my own research and try not to let the sell-side influence me.”
- “I love analyst downgrades because it gives me an opportunity to buy the stock.”
- “Most of the time I don’t even know what their ratings are, I just talk to the analysts that know the company the best.”
- “I’ve done this for long enough to know that more than half of them are wrong on their ratings.”
- “Sometimes ratings are based on momentum and not fundamentals. I invest in fundamentals.” Continue Reading
Sell ratings got you bothered? Can’t shake the feeling that an analyst is holding a grudge? Wish you could just make them go away?
Let’s discuss your negative analyst strategy in 3 steps:
- Remember the big picture
- Avoid the pitfalls
- Engage and execute
1. Remember the big picture.
There will always be analysts who are negative on your company. They won’t go away. Why?