Analyst calls provide an excellent way to get detailed information about a company and its future projections. Listening to analyst calls is a key component to fundamental analysis advised when trading stocks.
Company sponsored calls are primarily for institutional investors and Wall Street analysts. In the past, media and individual investors were not permitted to access these calls. Today, 80% of companies who sponsor analyst calls have now opened them up to the public. Thanks to the SEC’s Fair Disclosure (FD) Regulation in 2000, all companies are required to make public all major announcements that can affect the value of their stocks within 24 hours of informing any company outsiders.
In 1999, an earthquake hit Taiwan and interrupted the production of Apple Computer iBook and Powerbook notebook computers there. Apple Executives warned analysts that this event would prevent the company from meeting its numbers for the quarter. The stock fell 7% in 4 days. Most investors didn’t learn about this major new until it went public, giving insiders in the industry an unfair advantage.
Listening to Analyst Calls
During analyst calls, the CEO and CFO discuss the company’s financial reports and answer questions. Listen closely to how the executives respond to and answer questions. Analysts and institutional investors are often given the first opportunity to do the asking. Not all companies permit individual investors to ask.
Before listening, familiarize yourself with the company’s earnings history and analyst reports. Pay close attention to comments regarding earning expectations, revenue growth, analysts’ and senior managers’ moods and their projections for the company’s future. The more you listen in on calls, the more your ear will become attuned to the terminology used. You will soon be able to “read between the lines” and compare the current analyst call with precious reports and projections.