Buy-side, sell-side and media professionals all use a different mix of sources to gauge consensus estimates and IROs should seek to keep on top of the data shareholders and others are using, according to a study by Ipreo.
The study shows, for example, that First Call is used less often than commonly thought for consensus estimates, particularly by buy-side and sell-side professionals. Media including CNN, Dow Jones, the New York Times and CNBC, however, regularly cite First Call estimates, leading to the impression the firm’s estimates are used more frequently than they actually are, Ipreo says.
Ipreo provides broker estimates data to its clients through relationships with FactSet and Capital IQ.
‘While First Call certainly retains a large presence in providing the investment community with consensus information, it is less popular than we anticipated, particularly on the buy side and the sell side,’ says Ipreo. ‘First Call is still cited by the financial media, which may explain the misconception that it is the de facto standard for the entire financial community.’
Of the 19 major media sources cited, eight use First Call, nine use other sources and two don’t disclose the source of their consensus estimates, the study shows. Six, including the Financial Times, use FactSet and two use Bloomberg. More than 50 percent use more than one source.
‘As IR professionals, it may be worth revisiting our sources for consensus estimates,’ Ipreo concludes in the study. ‘The landscape for this type of data has changed over the last several years, and the status quo may not be the most effective means of benchmarking.’
The study shows the majority of buy-side firms use Bloomberg ‘often because they leverage Bloomberg for so many other parts of their workflow’ and FactSet, which ‘has a large foothold among sell-siders’, but the study respondents don’t provide a specific breakdown. A fifth (20 percent) use First Call for their consensus estimates.
‘We use Bloomberg mostly,’ an unidentified investment manager at a firm overseeing $37 bn tells Ipreo. ‘We also have Capital IQ, but usually we just look at Bloomberg when earnings season is coming around. It’s mostly a point of reference for us and we have Bloomberg at our desks, so we typically just use that.’
Of the 26 sell-side firms included in the survey, seven say they use First Call for consensus estimates, 10 do not, and the rest don’t disclose their sources. FactSet is cited as an additional source by six, while four name Bloomberg.
