WESTPORT, Conn., Feb. 26 /PRNewswire/ -- Reports of the so-called "death
of the sell side" are greatly exaggerated, a new study from Rivel Research
Group suggests, and sell-side analysts are playing a key new role in
developing investor interest in public companies -- providing access to
corporate management.
"Sell-side analysts remain instrumental in creating the formative
impressions of a company's investment appeal that help to drive investor
interest," said Brian Rivel, president. "In their growing role as access
facilitators, sell-side analysts have become a highly effective and efficient
channel for corporate management teams to connect with qualified investors,
and vice versa."
As part of its ongoing series of national studies among key investment
community constituencies, Rivel Research recently conducted in-depth
interviews with a representative, random sample of 251 sell-side analysts from
national, regional, specialty and independent institutions of all sizes.
The study makes clear the sell-side's changing role in the wake of Reg. FD
and Sarbanes-Oxley. Analysts themselves acknowledge that their function is no
longer about generating investment banking business but is much more firmly
entrenched in communications and information dissemination.
According to the survey, sell-side analysts see providing access to
corporate management as the single most important role they play in today's
investment world. In fact, almost nine out of 10 -- 87 percent -- insist on
meeting with senior management before initiating coverage of a company, and
fully one-third place a priority on meeting at least twice.
While one-on-one meetings are the preferred means of enabling buy-side
clients to learn about a company's investment appeal, analysts also see value
in field trips/site visits, company-sponsored analyst/investor days and
company-sponsored road shows. Presentations at investor conferences are least
preferred.
"Interestingly enough, despite this new role for sell-side analysts, there
is still a demand for their traditional service of producing investment
research reports for institutional investors," Rivel added. "While it may not
carry the same weight as it once did, both formal and informal sell-side
research still affords a useful perspective on a company's investment appeal.
Clearly, companies should not overlook the sell-side community when developing
an investor relations program -- especially smaller-cap companies, for which
it can be the single most important means of gaining broader attention from
the institutional investment community."
Among other findings of Rivel Research's latest study:
-- Like their buy-side counterparts, sell-side analysts place more
emphasis on a company's intangibles -- management credibility, an
effective business strategy and the like -- than on earnings or
revenue growth.
-- Also like the buy-side, 82 percent of the sell-siders believe investor
relations has a definitive, even quantifiable, impact on a company's
valuation. "Superb" vs. "poor" IR can account for a range anywhere
from a 10 percent premium to an 18 percent discount, according to the
sell-side.
-- In shaping their investment recommendations, sell-side analysts look
to a company's investor Web site as a source of information and
insight far more than other constituencies.
Robert G. Berick, managing director of Dix & Eaton, a communications
consulting firm that collaborates with Rivel Research, observed, "These latest
findings from Rivel Research underscore the need for companies to look at
their investor relations programs as more than a compliance function. Today
more than ever, sell-side analysts are looking for compelling 'stories' to put
in front of their institutional customers. To find those stories, they are
relying more and more on corporate Web sites, annual reports and other
communications tools. Therefore, the companies that make it easiest for the
sell-side to appreciate the tangible and intangible assets that fuel results
and create future growth opportunities will have a true competitive advantage
in the drive for shareholder value creation."
Copies of the Rivel Research study are available by contacting Brian Rivel
at the number shown below.
About Rivel Research Group
Founded in 1991, Rivel Research Group is the only firm that specializes in
delivering marketing research solutions through in-depth measurements of the
investment community. The firm's highly experienced staff provides the well-
informed, unbiased and strategically relevant intelligence companies need to
understand their investment appeal and effectively communicate with such key
constituencies as sell-side analysts, buy-side analysts, portfolio managers,
investor relations officers and the financial media. The comprehensive
information that Rivel supplies guides companies in evaluating performance,
formulating strategy and identifying opportunities.
About Dix & Eaton
Communication has the power to significantly improve performance, and Dix
& Eaton partners with client management to harness that power. We specialize
in building stronger stakeholder relationships through investor relations,
media relations, marketing communications and employee communications. We also
help organizations manage special situations with practices focused on crisis
management and transaction communications. Founded in 1952, Dix & Eaton is the
largest employee-owned PR and IR firm in the United States. For more
information, visit http://www.dix-eaton.com.
CONTACT: Brian Rivel, Rivel Research Group,
203-226-0800
SOURCE Rivel Research Group
Brian Rivel of Rivel Research Group, +1-203-226-0800; or Rob Berick of Dix &
Eaton Incorporated, +1-216-241-4611, for Rivel Research Group
