The sell side is innovating under pressure
If companies found it tough to successfully engage with the sell side in times gone by, then the uncertainty of today’s tumultuous financial landscape offers little sign of relief. IR teams face the challenge of cultivating relationships with an industry that is facing its own share of problems.
As Victoria Hyde-Dunn, vice president of investor relations at US software company Informatica, says: it’s a tough market for everyone.
‘Not even Wall Street is immune to the uncertain macro environment,’ she points out. ‘The sell side continues to be stressed, especially the more prominent firms covering 30-plus names with minimal resources.
‘Gone are the days of five analysts per team; we now see smaller teams with one lead analyst and one junior analyst covering multiple sectors, and even well-known and respected analysts are being laid off in rounds of corporate redundancies and restructuring.’
With almost 20 years on the sell side under his belt prior to his IR career, Steve Willoughby, senior vice president of IR and head of ESG at US scientific solutions company Revvity, understands the perspective from both sides of the coin and has observed a number of changes.
‘We now have some analysts who are covering more than 40 individual companies,’ he says. ‘I believe this stems from the corresponding investment banking relationship potential, but I feel it is likely having a detrimental impact on the quality and quantity of effort analysts and their teams can dedicate to any one particular company.
‘The other thing I’ve started to see more of from the sell side is attempts to differentiate corporate access offerings, especially as they pertain to more unique and intimate types of investor conferences. Several firms in the last year have started to do sub-industry conferences that are focused on just one or two pieces of a broader industry – for example, genomics instead of general healthcare. Others have started trying to offer events that are less ‘fireside chat’ and more ‘panel discussion’, which include a mix of both corporate executives and other industry participants.’
All of these changes mean IROs need to be mindful about keeping up to date with the latest developments, as Mitch Haws, vice president of investor relations at US semiconductor company Skyworks, advises.
‘The speed at which data and markets move is changing,’ he observes. ‘You can get way behind pretty quickly, so it’s important to stay plugged into the most influential analysts and understand what they are saying behind the scenes. That dialogue is often more important than what is written in a report.’
We now have some analysts who are covering more than 40 individual companies
