Ascent Capital has declined by 20% in 2015 and its latest earnings report was subpar as the company missed its revenue estimate by about $500,000, though it reported EPS on par with estimates. Still, analysts have an upbeat outlook on the stock with a mean and median price target of $55.00 – suggesting 30% upside from the current price of $42.13 – according to S&P Capital IQ. Even the low estimate of $45.00 is above Ascent Capital’s current share price of $42.00. As most small-cap stocks, though, Ascent Capital is thinly covered, with just three analysts reporting target prices. Zacks Research points out that revisions to the company’s estimates have been positive, however, and it rates Ascent Capital as a buy.
Although hedge funds and analysts seem to be bullish on Ascent Capital Group Inc (NASDAQ:ASCMA), it is a tough company to gauge as it has reported losses the last three years and is on track to do so again this year. Therefore, going along with hedge funds and taking heed to analyst advice may not be warranted in this case. Ascent Capital could be an acquisition candidate and an industry consolidation play, but that is more in the realm of speculation than it is in investment. Hedge funds and analysts have more access to company management, so they can best gauge the future prospects of this company. They seem positive now, but their sentiment could turn quickly. If an investor does decide to mirror hedge funds and follow analysts into Ascent Capital, he or she should monitor hedge fund activity, insider transactions, and analyst ratings extremely closely, even more so with Ascent Capital than with other stocks due to its unprofitable nature and thin coverage. That is not to say that Ascent Capital shares will not rise or the company will not be profitable in the future, it is just to say that it is difficult to discern based on past performance.