Investor Relations

54INVESTOR RELATIONSall legal disclaimers. In particular, it should be expressly mentionedthat any opinions, estimates, or forecasts regarding the performanceof your company made by these analysts are theirs alone and do notrepresent opinions, forecasts, or predictions of your company or itsmanagement. Markets tend to appreciate this kind of initiative. Stock recommendations. The number of “buy”, “sell,” and “hold”ratings has a determining influence on the share’s valuation. It isimportant to distinguish the recommendations that are based onfundamental analysis and those that reflect the current stock price.Analysts who like the company and have a good opinion of itsmanagers and growth prospects may very well advise investors totake profits when the stock hits their price target. And while it maybe flattering when all analysts have a buy rating, the risk is that anychange in recommendation may trigger a sell-off. Price targets. This is one variable that may reassure managementwhen the stock is down, even though no bad news has beenannounced. Investors may take profits once the price target set byanalysts has been reached or exceeded, unless, of course, supportcomes from upgrades and a new price target. Share ownership identification. This is, without doubt, the mostcostly undertaking in terms of time and money, but one that also delivers themost strategic benefits (see section 3.1). The objective is for listed companiesto find out exactly who owns them. Regulation can differ widely from onecountry to another, one of the few common requirements being that crossingsof statutory thresholds be notified to issuers. The frequency of share-ownershipidentification and trend reports is left to the latter’s discretion, but once thefree float reaches 40–50 percent level, companies that are developing InvestorRelations strategies should schedule them at least once a year and make surethat the investigation process and the corresponding reports are consistent overtime. This should guarantee optimal comparability of the data. Q&A book. This document brings together all of the questionsraised by the financial community and responses provided by the company.It should be constantly updated, notably prior to important events like earningsreleases. The topics should be classified by theme (finance, business,strategy, outlook being the main topics). The document helps to assure thatall those who speak on behalf of the company deliver the same message,internally and externally. Perception studies. One way for companies to manage theirInvestor Relations over the medium and long term is to assess their financialimage at regular intervals and around specific themes. As we shall see insection 2.4.2 below, this process also helps evaluate returns on investmentsin Investor Relations.