The turmoil on Wall Street has left fewer analysts covering companies of all sizes, the Journal reports, leaving smaller operations struggling to connect with investors. Since September, there have been more than 2,200 instances of analysts formally dropping coverage—nearly a quarter of all research. That plunge has been accelerated because of the demise of Lehman Brothers and Bear Stearns, both major analysis purveyors.
Without analysts to move the stock price, institutional investors tend to shy away, and liquidity plummets. “It has changed how we communicate with investors,” said a VP at Scholastic, which has gone from having six analysts to three. “We spend much more time with institutional investors than we did 5 years ago.” (Read more analyst guidance stories.)