In practice, stock analysts specialize in sectors. Thus, there are analysts from the construction sector, consumer or financial companies, to name a few examples. When an analyst follows up on a company, makes projections and makes investment recommendations on its shares, we say that a hedge is carried out. An analyst can cover companies such as Wal-Mart, América Móvil, Cemex, Amazon, etc.
In the case of the Mexican market, I consider that the number of coverage for each issuer is low. If we take the sample of the 35 companies that make up the S & P / BMV IPC index, the issuer with the highest number of hedges is WALMEX, as it is covered by 23 analysts. On average, each company in the index is followed by 15 analysts.
Out of the 35 companies in the sample, the other stations are very little analyzed. In the domestic market there are 140 issuers, of which only 42 have a follow-up of 10 or more analysts. To contrast, in the United States (US) companies such as Amazon or Facebook are followed by about 60 analysts, while in the S&P 500 sample there are 20 analysts per station.
A condition for the efficiency of a market is that the information is transferred to prices. The above is not an automatic process and it is right here where we find an area where analysis helps us. If a company reports very good quarterly results that should be good for the action, but if no one sees them or no one interprets them, the impact can be zero or sometimes misunderstood. Analysts help the market to process relevant information from companies and understand whether it has positive, neutral or negative implications.
There is also a correlation between the marketability of companies and the number of analysts that cover it. It is clear to me that correlation does not mean causality, although I think we can assume that the more analysts are interested in following up and publishing reports on an issuer, the operations with its shares may increase.