Two Winning Trades Based on Analyst Calls
Upgrades or downgrades from analysts can cause a stock to rally or plummet. Traders may wish to stay alert of ratings changes as they could serve as the basis for building a winning trade strategy.
On Tuesday, Benzinga Professional covered 12 stocks receiving new bullish or bearish ratings from research analysts. Ten of these stock were initiated with or upgraded to a bullish rating (Buy, Overweight or Outperform). The other two stocks were initiated with or were downgraded to a bearish rating (Sell, Underweight or Underperform).
All 12 stocks moved in-line with the new ratings in question. Below are two of the largest moves:
Jefferies on Nanosphere
At 5:45 AM, Benzinga Professional reported that Jefferies had upgraded Nanosphere(NASDAQ: NSPH) from Hold to Buy and raised its price target from $2 to $5. Shares opened at $3 and soared to an intraday high of $3.45 at 9:40 AM--a 10-minute gain of 15 percent. Read a preview with color of that report here.
Benchmark on BioClinica
At 6:38 AM this morning, Benzinga Professional reported that The Benchmark Company had initiated coverage on BioClinica (NASDAQ: BIOC) with a Buy rating and a price target of $8. BioClinica shares opened at $4.91 and reached an intraday high of $5.65 at 9:47 AM--a gain of 15.07 percent in less than 20 minutes. You can check out a preview with analyst color of that report here.
The Rest of the Ratings
The remaining ten stocks also moved in-line with the new ratings for at least part of the day. Currently, eight of these stocks are continuing in those directions.
Trading the Ratings
Had a trader assumed long positions on bullish ratings and short positions on bearish ratings, that trader could have seen a portfolio gain on Tuesday.
If a trader placed orders based on these ratings at market open, the trader could have seen a gain as much as 4.14 percent. This assumes that the trader covered their shorts at the lows of the day, and sold their longs at the highs of the day.
However, if that trader had covered their shorts at the highs and sold their longs at the low, that trader may have only lost as much as 1.04 percent.
Of course, performance would have varied depending on trader skill and the timing of entries and exits. Nevertheless, traders should keep analyst ratings in mind when formulating their strategies. Had traders held these positions until the time of this writing, the entire portfolio would be up by 1.73 percent.
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Latest Ratings for NSPH
|Aug 2015||Piper Jaffray||Maintains||Neutral|
|May 2015||Canaccord Genuity||Maintains||Buy|
|Feb 2015||Piper Jaffray||Downgrades||Overweight||Neutral|
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