buy side equity research reports

A Student’s Guide to Writing A Buy-Side Equity Research Report

• via Research , Resources

Marina Chang

A career in finance can take on many different forms — from investment banking to equity research. Equity researchers conduct detailed analyses in order to offer well-supported investment recommendations. Their analyses are then compiled into what is referred to as an equity research report. These reports differ on the sell-side and buy-side, but they do have some overlaps. This guide will break down the key components and formats to help you successfully craft your own equity research report.

What is an equity research report? What is the purpose of a research report?

An equity research report is a document prepared by an analyst that gives an overview of a business, including the industry it operates in, its management team, its financial performance, risks, and its target price. The purpose of a research report is to provide a recommendation on whether investors should buy, hold, or sell shares of a public company.

What’s the difference between a buy-side and sell-side equity research report?

Sell-side reports are the most common type of equity research report. They are typically produced by investment banks for their clients to help guide investment decisions. Sell-side analysts issue the often-heard recommendations of “buy,” “hold,” “neutral,” or “sell” to help clients with their investment decisions. This is favorable for the brokerage firm as each time a client decides to trade the brokerage firm gets a commission on the transaction.

Buy-side reports are internal reports, produced for the bank itself, and are guided by differing perspectives and motivations. Buy-side analysts determine how promising an investment seems and how well it fits with the fund’s investment strategy. These recommendations are made exclusively for the benefit of the fund that employs them and are not available to anyone outside the fund.

What information should be included within your equity research report?

• Recommendation  – Typically to buy, sell, or hold shares in the company. This section also usually includes a target price (i.e., $47.00 in the next 12 months).
• Company Update  – New releases, quarterly or annual results, major contracts, management changes, or any other recent or important information about the company.
• Investment Thesis  – A summary of why the analyst believes the stock will over or underperform and what will cause it to reach the share price target included in the recommendation. This is probably the most interesting part of the report.
• Financial Information & Valuation  – A forecast of the company’s income statement, balance sheet, cash flow, and valuation. This section is often an output from a financial model built in Excel.
• Risk & Disclaimers  – An overview of the risks associated with investing in the stock. This is usually a laundry list of all conceivable risks, thus making it feel like a legal disclaimer. The reports also have extensive disclaimers in addition to the risk section.

What information is needed for the industry pages?

• Competitive Rivalry  – This looks at the number and strength of competitors. How many rivals does the company have? Who are they, and how does the quality of their products and services compare?
• Supplier Power  – This is determined by how easy it is for suppliers to increase their prices. How many potential suppliers does the company have? How unique is the product or service that it provides, and how expensive would it be to switch from one supplier to another?
• Buyer Power  – Here, you ask how easy it is for buyers to drive prices down. How many buyers are there, and how big are their orders? How much would it cost them to switch from the company’s products and services to those of a rival? Are buyers strong enough to dictate terms?
• Threat of Substitution  – This refers to the likelihood of customers finding a different way to do what the company offers.
• Threat of New Entry  – The company’s position can be affected by how easy it is for a new company to enter the industry. How much would it cost, and how tightly is the industry regulated?

How to create and forecast a financial model.

• Gather the company’s most recent 10-K and 10-Q SEC filings.
• For all three financial statements, copy and paste the line items that can be forecasted.
• Make income statement projections based on margins as a percentage of revenue.
• Create a depreciation schedule to account for the reduction of PP&E and intangible assets over time.
• Calculate working capital assumptions.
• Forecast current assets and liabilities on the balance sheet.
• Adjust net change in cash and cash equivalents (CCE) with the cash flow statement.
• Reconcile the cash flow statement with the balance sheet.
• Compute the dividend payout ratio if the company offers a dividend.
• Create the shares repurchase schedule if the company has a share buyback program.
• Construct the debt schedule.
• Calculate interest income and interest expense from the debt schedule.
• Run multiple scenarios – Wall Street Case, Bear Case, Bull Case.
• Sanity check your assumptions.

How many pages should your equity research report contain?

An equity research report should not be more than 10 to 15 pages long. Aim to be both concise and cohesive.

What kind of disclaimer should be included?

It is important for the report to have certain disclaimers to show that the analyst writing the report isn’t biased. Some typical disclaimers are as follows: 

• Every ER report entirely reflects the views and personal opinions of the analyst as on the date of publication.
• The equity research analyst does not have an interest in the shares of the company.
• Compensation of the analyst is not linked directly to any specific research recommendations contained in the report.
• Financial analysts or equity research analysts working in brokerage firms or sell-side analysts write equity research reports.

With all these points in mind, you are now ready to write your own equity research report. Select a public company, use this guide as a reference, and see what results from your analysis. Congratulations in advance on completing your research report!

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References:

• https://www.financewalk.com/equity-research-report/
• https://corporatefinanceinstitute.com/resources/knowledge/valuation/equity-research-report/#:~:text=What%20is%20an%20Equity%20Research,distributes%20that%20research%20to%20clients.
• https://quickbooks.intuit.com/r/marketing/market-research-tips-how-to-conduct-an-industry-analysis/

About the Author

Marina Chang is a business student at New York University pursuing a double concentration in Finance and Data Science. She is currently an Investment Research Intern at Romero Capital. Marina is an Analyst at NYU's Smart Woman Securities, where she worked with a team of 5 to compete in a stock pitch. She is also a Staff Consultant at 180 Degrees Consulting. The organization provides affordable advising services for non-profits and social enterprises. Marina was a mentee of the Analyst Prep Program.

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What is an Equity Research Report?

Contents of an equity research report, buy side vs sell side research, why do banks publish equity research reports, equity research report recommendations, different types of reports, equity research report example, additional resources, equity research report.

A recommendation to buy, sell, or hold shares of a public company

An equity research report is a document prepared by an Analyst that provides a recommendation on whether investors should buy, hold, or sell shares of a public company . Additionally, it provides an overview of the business, the industry it operates in, the management team, its financial performance , risks, and the target price.

To learn more, check out CFI’s Valuation Modeling Classes .

Let’s take a closer look at what’s included in an equity research report. Below is a list of the main sections you’ll find in one of these reports.

• Recommendation – Typically to either buy, sell, or hold shares in the company. This section also usually includes a target price (i.e., $47.00 in the next 12 months).
• Company Update – Any recent information, new releases, quarterly or annual results , major contracts, management changes, or any other important information about the company.
• Investment Thesis – A summary of why the analyst believes the stock will over or underperform and what will cause it to reach the share price target included in the recommendation. This is probably the most interesting part of the report.
• Financial Information & Valuation – A forecast of the company’s income statement , balance sheet, cash flow , and valuation. This section is often an output from a financial model built in Excel.
• Risk & Disclaimers – An overview of the risks associated with investing in the stock. This is usually a laundry list that includes all conceivable risks, thus making it feel like a legal disclaimer. The reports also have extensive disclaimers in addition to the risk section.

It’s important to distinguish between buy side and sell side research reports.

Buy side firms (asset management companies) have their own internal research teams that produce reports and recommendations on which stocks the firm and its portfolio managers should buy and sell. The reports are only used for internal investment decision making and not distributed publicly.

Sell side firms such as investment banks produce equity research reports to be disseminated to their sales and trading clients and wealth management clients. These reports are distributed for free for a variety of reasons (explained below) and have a specific recommendation to buy, sell, or hold as well as an expected target price.

Learn more about buy side vs sell side  jobs.

The sell side publishes reports to generate fees, both directly and indirectly.

Direct: Trading Commissions

When an investment bank publishes valuable equity research for an institutional client, that client is then likely to use the bank to execute their trades for that stock. While there no actual agreement to do so, it’s an unspoken rule. The bank may also use the report to persuade the client to buy more shares in a holding they already have, to therefor further increase commissions.

Indirect: Investment Banking Relationships

All banks have a Chinese Wall between their investment banking teams and research departments, but there still remains an indirect incentive for research to be supportive of stocks the bank may provide investment banking services to. The fees that investment bankers earn on underwriting and mergers and acquisitions (M&A) are huge, and a bank would never want to miss out an opportunity to work with a CEO of a public company because the bank had a “Sell” rating on their stock.

For this reason, sell side research typically includes a disclaimer along the lines of, “Bank X seeks and does business with companies that are covered in its research reports. Because of this, investors should be aware that the firm may have a conflict of interest (due to these investment banking relationships) that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.”

Each bank has their own set of recommendations (terms) they use to rate a stock. Below is a list of the most common recommendations or rating analysts issue.

Ratings include:

• Buy, Outperform, Overweight
• Hold, Neutral, Marketweight
• Sell, Underperform, Underweight

To learn more, check out CFI’s Valuation Modeling Courses .

This guide has focused on a “typical” equity research report, but there are various other types that can take slightly different forms. Below is a list of other types.

Types of reports:

• Initiating Coverage – A long report (often 50-100+ pages long) that is released when a firm starts covering a stock for the first time.
• Industry Reports – General industry updates about a few companies in a sector.
• Top Picks – A list and summary of a firm’s top stock picks and their targeted returns.
• Quarterly Results – A report that focuses on the company’s quarterly earnings release and any updated guidance.
• Flash Reports – Quick 1-2 page report that comments on a new release from the company or other quick information.

Below is an example of an equity research report on Kraft Foods. As you can see in the images below, the analyst clearly lays out the recommendation, target price, recent updates, investment thesis, valuation, and risks.

Thank you for reading CFI’s guide on Equity Research Report. To learn more, these additional resources will be helpful:

• Investment Research
• Types of Valuation Multiples
• DCF Modeling Guide
• Finance Salary Guides
• See all valuation resources
• See all capital markets resources
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What’s in an Equity Research Report?

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Even though you can easily find real equity research reports via the magical tool known as “Google,” we’ve continued to get questions on this topic.

Whenever I see the same question over and over again, you know what I do: I bash my head in repeatedly and contemplate jumping off a building…

…and then I write an article to answer the question.

To understand an equity research report, you must understand what goes into a  stock pitch first.

The idea is similar, but an ER report is a “watered-down” version of a stock pitch.

But banks have some very solid reasons for publishing equity research reports:

Why Do Equity Research Reports Matter?

You might remember from previous articles that equity research teams do not spend that much time writing these reports .

Most of their time is spent speaking with management teams and institutional investors and sharing their views on sectors and companies.

However, equity research reports are still important because:

• You do still spend some time doing the required modeling work (~15%) and writing the reports (~20%).
• You might have to write a research report as part of the interview process.

For example, if you apply to an equity research role or an equity research internship , especially in an off-cycle process, you might be asked to draft a short report on a company.

And then in roles outside of ER, you need to know how to interpret reports quickly and extract the key information.

Equity Research Reports: Myth vs. Reality

If you want to understand equity research reports, you have to understand first why banks publish them: to earn higher commissions from trading activity.

A bank wants to encourage institutional investors to buy more shares of the companies it covers.

Doing so generates more trading volume and higher commissions for the bank.

This is why you rarely, if ever, see “Sell” ratings, and why “Hold” ratings are far less common than “Buy” ratings.

Different Types of Equity Research Reports

One last point before getting into the tutorial: There are many different types of research reports.

“Initiating Coverage” reports tend to be long – 50-100 pages or more – and have tons of industry research and data.

“Sector Reports” on entire industries are also very long. And there are other types, which you can read about here .

In this tutorial, we’re focusing on the “Company Update” or “Company Note”-type reports, which are the most common ones.

The Full Tutorial, Video, and Sample Equity Research Reports

For our full walk-through of equity research reports, please see the video below:

Table of Contents:

• 1:43: Part 1: Stock Pitches vs. Equity Research Reports
• 6:00: Part 2: The 4 Main Differences in Research Reports
• 12:46: Part 3: Sample Reports and the Typical Sections
• 20:53: Recap and Summary

You can get the reports and documents referenced in the video here:

• Equity Research Report – Jazz Pharmaceuticals [JAZZ] – OUTPERFORM [BUY] Recommendation [PDF]
• Equity Research Report – Shawbrook [SHAW] – NEUTRAL [HOLD] Recommendation [PDF]
• Equity Research Reports vs. Stock Pitches – Slides [PDF]

If you want the text version instead, keep reading:

Watered-Down Stock Pitches

You should think of equity research reports as “watered-down stock pitches.”

If you’ve forgotten, a hedge fund or asset management stock pitch ( sample stock pitch here ) has the following components:

• Part 1: Recommendation
• Part 2: Company Background
• Part 3: Investment Thesis
• Part 4: Catalysts
• Part 5: Valuation
• Part 6: Investment Risks and How to Mitigate Them
• Part 7: The Worst-Case Scenario and How to Avoid It

In a stock pitch, you’ll spend most of your time and energy on the Catalysts, Valuation, and Investment Risks because you want to express a VERY different view of the company .

For example, the company’s stock price is $100, but you believe it’s worth only $50 because it’s about to report earnings 80% lower than expectations.

Therefore, you recommend shorting the stock. You also recommend purchasing call options at an exercise price of $125 to limit your losses to 25% if the stock moves in the opposite direction.

In an equity research report, you’ll still express a view of the company that’s different from the consensus, but your view won’t be dramatically different.

You’ll spend more time on the Company Background and Valuation sections, and far less time and space on the Catalysts and Risk Factors. And you won’t even write a Worst-Case Scenario section.

If a company seems overvalued by 50%, a research analyst would probably write a “Hold” recommendation, say that there’s “uncertainty around several customers,” and claim that the company’s current market value is appropriate.

Oh, and by the way, one risk factor is that the company might report lower-than-expected earnings.

The Four Main Differences in Equity Research Reports

The main differences are as follows:

1) There’s More Emphasis on Recent Results and Announcements

For example, how does a recent product announcement, clinical trial result, or earnings report impact the company?

You’ll almost always see recent news and updates on the first page of a research report:

These factors may play a role in hedge fund stock pitches as well, but more so in short recommendations since timing is more important there.

2) Far-Outside-the-Mainstream Views Are Less Common

One comical example of this trend is how all 15 equity research analysts covering Enron rated it a “buy” right before it collapsed :

Sell-side analysts are far less likely to point out that the emperor has no clothes than buy-side analysts.

3) Research Reports Give “Target Prices” Rather Than Target Price Ranges

For example, the company is trading at $50.00 right now, but we expect its price to increase to exactly $75.00 in the next twelve months.

This idea is completely ridiculous because valuation is always about the range of possible outcomes, not a specific outcome.

Despite horrendously low accuracy , this practice continues.

To be fair, many analysts do give target prices in different cases, which is an improvement:

4) The Investment Thesis, Catalysts, and Risk Factors Are “Looser”

These sections tend to be “afterthoughts” in most reports.

For example, the bank might give a few reasons why it expects the company’s share price to rise: the company will capture more market share than expected, it will be able to increase its product prices more rapidly than expected, and a competitor is about to go bankrupt.

However, the sell-side analyst will not tie these factors to specific share-price impacts as a buy-side analyst would.

Similarly, the report might mention catalysts and investment risks, but there won’t be a link to a specific valuation impact from each factor.

So the typical stock pitch logic (“We think there’s a 50% chance of gaining 80% and a 50% chance of losing 20%”) won’t be spelled out explicitly:

Your Sample Equity Research Reports

To illustrate these concepts, I’m sharing two equity research reports from our financial modeling courses :

The first one is from the valuation case study in our Advanced Financial Modeling course , and the second one is from the main case study in our Bank Modeling course .

These are comprehensive examples, backed by industry data and outside research, but if you want a shorter/simpler example you can recreate in a few hours, the Core Financial Modeling course has just that.

In each case, we started by creating traditional HF/AM stock pitches and valuations and then made our views weaker in the research reports.

The Typical Sections of an Equity Research Report

So let’s briefly go through the main sections of these reports, using the two examples above:

Page 1: Update, Rating, Price Target, and Recent Results

The first page of an “Update” report states the bank’s recommendation (Buy, Hold, or Sell, sometimes with slightly different terminology), and gives recent updates on the company.

For example, in both these reports we reference recent earnings results from the companies and expectations for the next fiscal year:

We also give a “target price,” explain where it comes from, and give our estimates for the company’s key financial metrics.

We mention catalysts in both reports, but we don’t link anything to a specific valuation impact.

One problem with providing a specific “target price” is that it must be based on specific multiples and specific assumptions in a DCF or DDM.

So with Jazz, we explain that the $170.00 target is based on 20.7x and 15.3x EV/EBITDA multiples for the comps, and a discount rate of 8.07% and Terminal FCF growth rate of 0.3% in the DCF.

Next: Operations and Financial Summary

Next, you’ll see a section with lots of graphs and charts detailing the company’s financial performance, market share, and important metrics and ratios.

For a pharmaceutical company like Jazz, you might see revenue by product, pricing and # of patients per product per year, and EBITDA margins.

For a commercial bank like Shawbrook, you might see loan growth, interest rates, interest income and net income, and regulatory capital figures such as the Common Equity Tier 1 (CET 1) and Tangible Common Equity (TCE) ratios:

This section of the report explains how the analyst or equity research associate forecast the company’s performance and came up with the numbers used in the valuation.

The valuation section is the one that’s most similar in a research report and a stock pitch.

In both fields, you explain how you arrived at the company’s implied value, which usually involves pasting in a DCF or DDM analysis and comparable companies and transactions.

The methodologies are the same, but the assumptions might differ substantially.

In research, you’re also more likely to point to specific multiples, such as the 75 th percentile EV/EBITDA multiple, and explain why they are the most meaningful ones.

For example, you might argue that since the company’s growth rates and margins exceed the medians of the set, it deserves to be valued at the 75 th percentile multiples rather than the median multiples:

Investment Thesis, Catalysts, and Risks

This section is short, and it is more of an afterthought than anything else.

We do give reasons for why these companies might be mis-priced, but the reasoning isn’t that detailed.

For example, in the Shawbrook report we state that the U.K. mortgage market might slow down and that regulatory changes might reduce the market size and the company’s market share:

Those are legitimate catalysts, but the report doesn’t explain their share-price impact in the same way that a stock pitch would.

Finally, banks present Investment Risks mostly so they can say, “Well, we warned you there were risks and that our recommendation might be wrong.”

By contrast, buy-side analysts present Investment Risks so they can say, “There is a legitimate chance we could lose 50% – let’s hedge against that risk with options or other investments so that our fund does not collapse .”

How These Reports Both Differ from the Corresponding Stock Pitches

The Jazz equity research report corresponds to a “Long” pitch that’s much stronger:

• We estimate its intrinsic value as $180 – $220 / share , up from $170 in the report.
• We estimate the per-share impact of each catalyst: price increases add 15% to the share price, more patients from marketing efforts add 10%, and later-than-expected generics competition adds 15%.
• We also estimate the per-share impact from the risk factors and conclude that in the worst case , the company’s share price might decline from $130 to $75-$80. But in all likelihood, even if we’re wrong, the company is simply valued appropriately at $130.
• And then we explain how to hedge against these risks with put options.

The same differences apply to the Shawbrook research report vs. the stock pitch, but the stock pitch there is a “Short” recommendation where we claim that the company is overvalued by 30-50%.

And that sums up the differences perfectly: A Short recommendation with 30-50% downside in a stock pitch turns into a “Hold” recommendation with roughly equal upside and downside in a sell-side research report.

I’ve been harsh on equity research here, but I don’t want to disparage it too much.

There are many positives: You do get more creativity than in IB, it might be better for hedge fund or asset management exits, and it’s more fun to follow companies than to grind through grunt work on deals.

But no matter how you slice it, most equity research reports are watered-down stock pitches.

So, make sure you understand the “strong stuff” first before you downgrade – even if your long-term goal is equity research.

You might be interested in:

• The Equity Research Analyst Career Path: The Best Escape from a Ph.D. Program, or a Pathway into the Abyss?
• Private Equity Regulation : 2023 Changes and Impact on Finance Careers
• Stock Pitch Guide: How to Pitch a Stock in Interviews and Win Offers

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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Read below or Add a comment

15 thoughts on “ What’s in an Equity Research Report? ”

Hi Brian, what softwares are available to publish Research Reports?

We use Word templates. Some large banks have specialized/custom programs, but not sure how common they are.

Is it possible if you can send me a template in word of an equity report? It will help the graduate stock management fund a lot at Umass Boston.

We only have PDF versions for these, but Word should be able to open any PDF reasonably well.

Do you also provide a pre constructed version of an ER in word?

We have editable examples of equity research reports in Word, but we generally only share PDF versions on this site.

Hey Brian Can you please help me with coverage initiated reports on oil companies. I could not find them on the net. I need to them to get equity research experience, after which only I will be able to get into the field. I searched but reports could not be found even for a price. Thanks

We have an example of an oil & gas stock pitch on this site… do a search…

https://mergersandinquisitions.com/oil-gas-stock-pitch/

Beyond that, sorry, we cannot look for reports and then share them with you or we’d be inundated with requests to do that every day.

No worries. Thanks!

Hi! Brian! Do u know how investment bankers design and layout an equity research? the software they use. like MS Word, Adobe Indesign or something…? And how to create and layout one? Thanks

where can I get free equity research report? I am a Chinese student and now study in Australia. Is the Morning Star a good resource for research report?

Get a TD Ameritrade to access free reports there for certain companies.

How do you view the ER industry since the trading commission has been down 50% since 2007. And there are new in coming regulation governing the ER reports have to explicitly priced and funds need to pay for the report explicity rather than as a service comes free with brokerage?

In addition the whole S&T environment is becoming highly automated.

People have been predicting the death of equity research for over a decade, but it’s still here. It may not be around in 100 years, but it will still be around in another 10 years, though it will be smaller and less relevant.

Yes, things are becoming more automated, but the actual job of an equity research analyst or associate hasn’t changed dramatically. A machine can’t speak with investors to assess their sentiment on a company – only humans can do that.

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An Ultimate Guide to Equity Research

This post was originally published on August 15, 2019 and was updated for relevance on July 29, 2024.

Equity research is a specialized field within the finance industry that analyzes public companies, industries, and the overall economy. It helps investors make informed decisions about buying, holding, or selling investments.

In this guide, we’ll explore equity research, its definition, how to conduct research analysis, what goes into a research report, the various roles involved, key considerations when selecting an equity research firm, career pathways into the equity research industry, and more. 

With that, let’s get started.

What is equity research?

Before we discuss equity research, it’s important to understand the concept of equity. Equity is the full ownership of an asset once its associated debts have been settled. Equity research, or “securities research,” refers to the process investment banks use to understand a company's overall equity or value. 

Equity analysts, often working within an investment bank, lead this process. They create documents that delineate the equity in question within the context of the business, its management, the broader industry, and the economic landscape.

The larger the investment bank, the more reports an equity research team will tend to produce, and the analysis included will be more detailed. Examples of analysis include:

• Review of how the macroeconomic picture is likely to affect the company
• Operational changes or investments that are likely to affect the company’s performance
• Review the company’s financial statements and explanation of changes
• Projections on the status of the company’s revenue (and share price) and where it’s headed
• Recommendations on whether to buy, hold, or sell the company’s equity

How to conduct equity research analysis

Research is the name of the game. An Equity Research Analyst is responsible for providing vetted and trusted insights to make sound and informed investment decisions. This process is typically broken into four stages: 

1. Thorough Research

Equity Research Analysts focus on specific regions and sectors. They leave no stone unturned in conducting extensive research, thoroughly reviewing financial reports, balance sheets in Excel, earnings releases, industry trends, regulatory changes, macroeconomic factors, and more that could impact the companies they are analyzing.

2. Financial Modelling & Valuation

Financial modeling involves creating mathematical representations of a company's financial performance by forecasting future results based on historical data and assumptions. Valuation is used to determine the fair value of a company's stock using methods such as discounted cash flow analysis and comparable company analysis. These tools help evaluate a company's financial health and growth potential to advise on investments.

3. Creating Equity Research Reports

Equity Research Analysts are responsible for condensing their findings into easily understandable reports for investors. We'll expand on this more in the next section. 

4. Communication Skills & Publication

Equity Research Analysts in senior or lead positions often present their findings to their organization or client base. These individuals must be able to simplify complex financial data, so strong communication and presentation skills are essential.

What is an equity research report?

Buy-side or sell-side, an equity research report typically includes the following:

• An industry research overview that covers trends and news related to competing companies.
• A company overview that includes any recent business developments and quarterly performance results.
• The equity analyst provides an investment thesis explaining the reasons behind their prediction of the stock's performance. This section also includes the target share price, which many consider the most critical aspect of the report.
• A financial model-based forecast of the company's income, cash flow, and valuation.
• Risks associated with the stock.

Difference between a career in equity research and investment banking

Investment banking and equity research are similar but have clear distinctions in their intended outcome. Investment banking is all about helping companies raise money through stocks and bonds, offering mergers and acquisitions services, and managing significant financial deals. 

Equity research involves evaluating individual stocks and providing investment advice based on their potential value and performance.

In essence, investment banking focuses on managing financial transactions, while equity research focuses on analyzing and valuing individual stocks.

When considering a career between the two, it's imperative to evaluate the following factors: 

1. Educational Background 

Both career paths require a bachelor's degree in economics, accounting, finance, or engineering. For career growth, a Chartered Financial Analyst (CFA) designation is often required for Equity Research Analysts, while investment banking can require a Master of Business Administration (MBA). Additionally, investment bankers must pass the Series 79 exam , which measures the knowledge needed to perform the critical functions of an investment banking representative. 

2. Career Path 

In investment banking, the career path is straightforward. It starts with being an analyst, then an associate, and climbing to higher positions. In equity research, the career path could be more transparent. Typically, it involves transitioning from associate to analyst, senior analyst, and then to the role of vice president or director of research. Investment bankers have better opportunities to reach top positions because of their involvement in making deals and managing clients. They often go on to work for private equity firms for venture capitalists. Research analysts are frequently seen solely as number crunchers and not thought of as being able to drive substantial business growth.

3. Skill Set 

It should come as no surprise that Equity Research Analysts require strong analytical and mathematical skills to handle complex calculations, build predictive models, and prepare financial statements. They must also be proficient communicators capable of simplifying complex financial data. As for investment bankers, financial modeling and industry analysis are crucial early in their careers. However, as they advance, they transition to a sales-oriented mindset, excelling at closing deals and managing client relationships. 

4. Work-Life Balance 

Equity research is known for long hours, particularly during earnings season, but there are periods of relative calm. Investment banking is another beast, typically requiring brutal hours, often up to 100 hours per week. A recent article in Forbes highlighted that work-life balance has become a significant concern in investment banking. This is particularly after the reported deaths of two Bank of America employees who were said to be working up to 110 hours per week. 

5. Recognition 

Equity research reports offer visibility to associates and junior analysts. Senior analysts are sought after by the media for comments on the companies they cover. Junior investment bankers work in obscurity but gain visibility as they progress in their careers. Visibility for investment bankers significantly increases when they work on large, prestigious deals.

6. Compensation 

Investment banking generally offers higher earning potential compared to equity research. For example, according to Wall Street Oasis (WSO), investment banking associates earn between $150,000 and $200,000 with substantial bonuses, while senior vice presidents or managing directors earn over $400,000 annually. WSO also says entry-level analysts start between $50,000 and $80,000 and have the potential to make up to $500,000 as they grow to leadership positions.

Roles in equity research

In the world of equity research, it is crucial to understand the distinction between a buy-side and sell-side Equity Research Analyst. Below, we'll outline their respective areas of focus and ultimate objectives.

1. Sell-side analysts

Sell-side Equity Research Analysts work for investment banks and provide their clients with sell-side research and recommendations on stocks and other financial instruments. Their primary goal is to generate trading commissions and investment banking business for their firm.

2. Buy-side analysts

A buy-side Equity Research Analyst works for institutions that buy and sell securities, such as mutual funds, hedge funds, and pension funds. Their role involves researching and making investment recommendations for their firm's portfolios.

Best Equity Research Firms 

Below are some of the top-ranking equity search firms. 

• JP Morgan —J.P. Morgan’s Research team uses state-of-the-art technologies and innovative tools to provide clients with top-notch analysis and investment advice.
• Barclays —The equity research teams cover hundreds of stocks across the Americas and Europe, delivering event analysis, stock ideas, and sector themes. They collaborate with other teams to offer clients unique, cross-asset perspectives on industries and markets.
• Credit Suisse AG —The team has original research on over 3,000 companies with thought-provoking thematic analysis, differentiated trading ideas, and coordinated global views. 
• Bank of America Financial Center —The company offers comprehensive research and analysis for both institutional and retail clients. It encompasses over 4,000 companies across 35 global sectors in developed and emerging markets. Its research involves fundamental and technical analysis as well as hedging strategies.
• Morgan Stanley —Through timely, in-depth analysis of companies, industries, markets, and world economies, Morgan Stanley has earned its reputation as a leader in investment research.

Things to consider when hiring an equity research firm

When evaluating an equity research firm, it’s essential to consider the experience and reputation of its analysts, the firm’s track record of accurate stock picks and recommendations, the depth and quality of their research reports, the firm's access to company management and industry experts, their industry specialization, the firm's coverage universe, the timeliness of their research, and the overall transparency and integrity of their research process.

How to get into equity research

If you are considering entering the equity research space, you will likely need a finance, accounting, or economics background. Many professionals in this field begin with a bachelor's degree in finance or a related field. Those seeking career advancement often pursue a master's degree or a CFA designation to enhance their resume.

Research assistant,  junior analyst, or equity research associate are common entry-level roles. Advancing in your career will require gaining experience in financial analysis, modeling, and report writing. Developing a solid network of connections within the industry is also crucial for discovering new opportunities in equity research. Like all areas of business, networking is critical.

Staying up to date on the latest trends and news within the equity research space is important for understanding the workings of the stock market and developing strong analytical and critical thinking skills. This is crucial for ensuring high-quality, long-lasting success in equity research.

The Importance of Equity Research

As we've discussed, equity research is essential for investors as it provides valuable information and investment recommendations. It involves digging into company finances, creating financial models, and meeting with industry experts. 

Equity research supports investment decisions, evaluates securities, and guides investors and fund managers. For example, it helps predict the future growth potential of tech companies, find investment opportunities in the pharmaceutical industry, and understand how macroeconomic trends affect different sectors and stocks.

Final Thoughts 

Equity research is crucial in empowering investors to make informed investment decisions. Through comprehensive analysis of financial data, market trends, and company performance, equity research provides valuable insights that enable investors to identify attractive opportunities and manage their portfolios effectively. By leveraging the expertise of research analysts and utilizing robust analytical techniques, investors can gain a deeper understanding of the risks and potential returns associated with specific investment opportunities. Ultimately, equity research is a fundamental tool for institutional and retail investors, helping them navigate the complexities of the financial markets with confidence and clarity.

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Equity Research Report

• What is an Equity Research Report?

An equity research report is a document prepared by an equity analyst. It is a form of communication between financial experts and investors. The analyst conducts an in-depth analysis of a company, industry, or even an economy and explains his findings in the form of a report. The purpose of preparing such reports is to provide investment recommendations to the clients (buy, sell or hold).

• Who Produces Them?

As we are all aware, Buy-side firms conduct their own research on which stocks they should buy and sell. The reports are only used internally by their portfolio managers and are not available publicly.

Investment Rating / Recommendation

Company analysis, investment argument, financial performance and analysis, sample report, initiation of coverage, industry report, tips for preparing good reports.

Sell-side firms conduct equity research on behalf of their clients. Investment banks or brokerage houses sell their investment ideas to clients, expecting transaction costs and commissions in return (though there is no rule that clients have to buy). Hence, they produce reports to help them make better investment decisions. These reports are often available free for their clients. Examples of clients for such reports are pension funds, insurance companies, retail and institutional investors, etc.

Constituents of an Equity Research Report

Let us take a sneak peek into an equity research report and understand what sections are required in the report. Most of the equity reports have the following in the list of sections.

Also Read: Equity Research

This section gives an idea of what the analyst thinks about the stock. It is usually either buy, sell, or hold. This section also includes a target price, which means the best price (as per the analysts’ view) to buy/sell a company.

Includes information regarding the company. This section covers the company’s business, its products, organizational structure, management, etc. It also consists of any recent information released by the company like major contracts, management changes, or any other important information about the company.

Here, the analyst provides a detailed explanation supporting his investment recommendation. This is the most important section of the report, and an analyst spends most of his time drafting this part.

Financial analysis is performed in excel using financial modeling , but its findings are presented here. This section provides comprehensive detail on a company’s financial performance, its historical performance, and current earnings. The analyst also presents the valuation of the company and his assumptions used to predict future earnings.

Also Read: Equity Research Analyst

This section addresses the potential risks an industry or a company poses to an investor. For instance, regulatory risks, operational risks, financial risks, etc., can significantly impact the stock price.

Following is a sample report published by one of the major financial centers.

Types of Equity Research Reports

Following are the three main categories of these reports:

When a broker or an analyst starts covering up the stock for the first time, he publishes this report. This means this is the first time an analyst gives a recommendation on a particular company. Therefore, this is a detailed report that explains many things about the company. For example, the report provides exhaustive information on the company’s business, its products, services, industry, and market data. It also provides other details, for example, the rationale behind the investment recommendation, valuation, information on competitors, etc.

This report provides deep insights into a particular industry. For example, the report covers topics like recent trends in the industry, updates on the recent regulations, competitors, etc. This type of report is also usually long because it covers an entire industry. An industry report also covers information on key drivers, risk factors, and overall valuation levels, followed by shorter sections on specific companies.

This report is a relatively shorter one. Analyst issues this report to update the existing ones that already have an investment recommendation. This covers events happening in the company. For instance, earnings releases, investor day, or any major announcements by the company affect its strategies, such as an acquisition or a new product launch.

• An investor often would not have enough time to read the complete report. Hence, all the important items like a recommendation, target price, and earnings estimates must be present on the first page.
• Too much information is poisonous. A good report is that when a reader gets the required insight for the first time, he reads it. Therefore, the report has to be precise and right to the point.
• Quality and quantity matter. It is necessary to provide accurate information and is also important to deliver the reports on time. Many brokerage firms come up with similar reports. Hence, our report gains significance only if it is the first in the market to report any updates on a particular company. For example, an earnings release update does not make sense after 3 to 4 days after the release.

RELATED POSTS

• Equity Research Firms
• Equity Research Buy-Side
• Equity Research Sell-Side
• Equity Research Vs. Credit Research
• Types of Financial Statements
• Advantages and Disadvantages of Equity Valuation

Sanjay Bulaki Borad

MBA-Finance, CMA, CS, Insolvency Professional, B'Com

Sanjay Borad, Founder of eFinanceManagement, is a Management Consultant with 7 years of MNC experience and 11 years in Consultancy. He caters to clients with turnovers from 200 Million to 12,000 Million, including listed entities, and has vast industry experience in over 20 sectors. Additionally, he serves as a visiting faculty for Finance and Costing in MBA Colleges and CA, CMA Coaching Classes.

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Buy Side vs. Sell Side

Guide to Understanding Buy-Side vs. Sell-Side

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Table of Contents

What is Buy-Side vs. Sell-Side?

Sell side: investment banking industry and firms, what is the sell side function, what is the buy side function, what are examples of buy side firms, what are buy side vs. sell side mandates in investment banking.

You’ll often hear finance professionals describe their role as being either on the “sell side” or on the “buy side.” As is the case with a lot of finance jargon, what this exactly means depends on the context.

• Sell Side refers primarily to the investment banking industry . It refers to a key function of the investment bank, namely to help companies raise debt and equity capital, and then sell those securities to  investors such as mutual funds, hedge funds, insurance companies, endowments and pension funds.
• Buy Side refers to institutional investors, or in simple terms, the investors who buy  the securities.

On that note, a related function by the sell side is to facilitate buying and selling between investors of securities already trading on the secondary market .

While we describe the various functions of the investment bank here , we can briefly outline its capital raising and secondary markets roles:

• Primary capital markets: Investment banks work with companies to help them raise debt and equity capital. Those bonds and stocks are sold directly to institutional investors and are arranged through the investment bank’s equity capital markets (ECM) and debt capital markets (DCM) teams, who, along with the investment bank’s sales force, market via roadshows (see examples of roadshows ) and distribute the securities to institutional clients.
• Secondary capital markets: In addition to helping companies raise capital, the investment bank’s sales & trading arm facilitates and executes trades on behalf of institutional investors in the secondary markets, where the bank matches up institutional buyers and sellers.

Learn More → Buy Side and Sell Side Infographic

The investment bank has several key functions that make its role as a seller of corporate securities to investors possible. Those roles include:

• Investment banking (M&A and corporate finance) : The investment banker is the primary relationship manager interfacing with corporations.  The banker’s role is to probe and understand its corporate clients’ capital raising needs and to identify opportunities for the bank to win business.
• Equity capital markets: Once the investment banker has established that a client is considering raising equity capital, ECM begins its work.  ECM’s job is to usher corporations through the process.  For IPOs, for example, the ECM teams are the key hub in determining structure, pricing and reconciling the clients’ objectives with current conditions in the capital markets.
• Debt capital markets: The DCM team plays the same role that ECM plays, but on the debt capital side.  
• Sales and trading: Once a decision to raise capital is made, the sales & trading floor begins its job to contact investors and actually sell the securities.  The sales & trading function not only works on helping initial debt and equity offerings get subscribed, they are central to the investment bank’s intermediary function in secondary capital markets, buying and selling already trading securities on behalf of clients (and sometimes for the bank’s own account “prop trading”).
• Equity research : Equity research analysts are also known as sell-side research analysts ( in contrast to buy side research analysts ). The sell side research analyst supports the capital raising process as well as sales and trading in general, by providing ratings and other hopefully value-adding insights on the firms they cover. These insights are directly communicated through the investment bank’s sales force and through equity research reports. While sell side equity research is objective and separated from the investment bank’s capital raising activities, questions about the function’s inherent conflicts of interest were brought to the fore during the late ’90s tech bubble and still linger today.

The buy side broadly refers to money managers, or “institutional investors”.

Examples of institutional investors include private equity firms (PE) and hedge funds .

These firms raise outside capital from investors – otherwise known as limited partners (LPs) – and invest their contributed capital across various asset classes using a variety of different investing strategies.

Before getting into the specific types of institutional investors, let’s establish whose money these institutional investors are playing with. As of 2014, there were $227 trillion in global assets ( cash , equity, debt, etc) owned by investors.

• Nearly half of that ($112 trillion) is owned by high net worth, affluent individuals and family offices.
• The rest is owned by banks ($50.6 trillion), pension funds ($33.9 trillion) and insurance companies ($24.1 trillion).
• The remainder ($1.4 trillion) is owned by endowments and other foundations.

So how are these assets invested?

• 76% of assets are invested directly by owners  1 .
• The remaining 24% of assets is outsourced to third part managers that act on behalf of the owners as fiduciaries. These money managers constitute  the buy side .
• Mutual Funds and ETFs: Mutual funds are the largest type of investment fund, with over $17 trillion in assets.  These are actively managed funds, in other words, their portfolio managers and analysts analyze investment opportunities, rather than passive funds like ETFs and index funds. Currently, 59% of mutual funds focus on stocks (equities), 27% are bonds (fixed-income), while 9% are balanced funds and the remaining 5% are money market funds 2 .   Meanwhile, ETF funds are a fast-growing competitor to mutual funds.  Unlike mutual funds, ETFs are not actively managed, enabling investors to get the same diversification benefits without the hefty fees.  ETFs now have $4.4 trillion in assets  3 .
• Hedge Funds: Hedge funds are a type of investment fund. While mutual funds that are marketed to the public, hedge funds are private funds and are not allowed to advertise to the public. In addition, in order to be able to invest with a hedge fund, investors must demonstrate high wealth and investment criteria. In exchange, hedge funds are largely free from regulatory restrictions on trading strategies that mutual funds face. Unlike mutual funds, hedge funds can employ more speculative trading strategies, including short selling and taking highly leveraged (risky) positions.   Hedge funds have $3.1 trillion in global assets under management 4 .
• Private Equity:  Private equity funds pool investor capital and take significant stakes in businesses and focus on achieving returns to investors through altering the capital structure, operational performance and management of the businesses they own. This strategy lies in contrast to hedge funds and mutual funds that focus more on larger public companies and take smaller, passive stakes in a larger group of companies. Private equity now has $4.7 trillion in assets under management  5 .  Read more about the career of a private equity associate .

Other buy side investors: Insurance, pensions and endowments

As we mentioned earlier, life insurance companies, banks, pensions and endowments outsource to the institutional investors described above, as well as directly investing. This group represents the bulk of the rest of the professional investor universe.

Learn More → Hedge Fund Primer

To complicate matters a bit, the terms “sell side” and “buy side” mean something completely different in the investment banking M&A context. Specifically, sell-side M&A refers to investment bankers working on an engagement where the investment bank’s client is the seller. Working on the buy-side simply means the client is the buyer. This definition has nothing to do with the broader sell side/buy side definition described previously.

As a side note, investment bankers generally prefer to work on sell-side engagements. That’s because when a seller has retained an investment bank, they usually decide to sell, increasing the likelihood that a deal will happen and that a bank will collect its fees. Meanwhile, investment banks often pitch to buy side clients, which doesn’t always materialize into deals.

1 Blackrock. Read the survey .

2 ICI and mutualfunds.com. http://mutualfunds.com/education/how-big-is-the-mutual-fund-industry/.

3 Ernst & Young. Read the report .

4 Prequin. Read the report. 5  McKinsey. Read the report.

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Great read! I also love this definition I have found on DealRoom: Essentially, sell-side is the sector of the financial market that is all about creation, promotion, and selling traded securities to the public. On the other end, buy-side deals with purchasing and investment of large portions of securities for …  Read more »

Great points!

Cheers, Jeff

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What is an Equity Research Report?

One of the most powerful tools at investors’ disposal is equity research reports. Wall Street firms employ some of the sharpest minds in the industry who study companies with publicly traded stocks. These analysts delve into every aspect of the company, from its financial statements to its management team and competitors. Equity research reports provide solid analysis and the opinions of the analysts who follow the companies and their stocks extremely closely.

What Is an Equity Research Report?

An equity research report is a detailed report written by an analyst at a sell-side firm or independent investment research firm that analyzes the company’s business and finances and gives the analyst’s opinion of the company’s prospects and future stock price.

Analysts are experts in the companies’ businesses, finance, and industries they follow. They research a company’s financials, performance, and competitive landscapes. They also create models to predict metrics like future earnings per share, sales, and a target price for the stock.

Analysts keep a close eye on every move of the companies they follow and update their equity research reports at least once a quarter after the company issues its quarterly earnings report. If significant material changes occur mid-quarter, the analyst will write an update to their research report in a flash report.

An example of an equity research report is a report on Apple written by a sell-side analyst from Argus. This report includes the analyst’s analysis and opinions about the company’s financials and future revenue and earnings predictions. The report also provides the analyst’s target price estimate and rating.

Important Components of a Typical Equity Research Report

The typical equity research report includes components that dig into the company’s financials, industry landscape, risks, and other vital aspects that can materially affect the company’s future business performance and stock price.

Recent Results & Company Announcements

Shortly after a company announces its quarterly results, an analyst will issue a new equity research report. This report will include an analysis of the recent quarterly results, including EPS, sales, and various financial metrics like EBITDA and profit margins.

When releasing quarterly results, a company often makes announcements in a press release or through a conference call between management and the analyst community. The equity research report will include an analysis of these company announcements.

Organizational Overview and Commentary

An equity research report typically summarizes the company’s organizational structure. This summary outlines the management structure and the company’s major divisions.

If the company makes any significant structural changes, such as appointing a new CEO or shutting down a division, the analyst will discuss the implications of these changes in the equity research report.

Valuation Information

Perhaps the most impactful part of an equity research report is the valuation analysis provided by the research analyst. The analyst provides an overview of the company’s performance through this analysis.

The valuation information included within an equity research report includes margin analysis, EPS and sales estimates, the stock’s target price estimate, and other valuation and financial metrics calculated through a deep dive into the company’s financial statements.

An analyst uses a company’s reported results and their own research into the company’s operations and the industry to calculate various estimates. The most prominent estimate is the EPS estimate, the analyst’s estimate for earnings per share for future quarters and fiscal years. Analysts also calculate forecasts for sales, margins, and other financial metrics.

Many equity brokerage reports include a target price estimate, which is a short-term estimate for the stock’s price. An analyst may also issue a rating for the company’s stock, such as buy, sell, or hold.

Financial Histories

An equity research report typically contains financial data going back several years on both a quarterly and fiscal year basis. The analyst uses this financial data to perform an analysis of the company’s financial health and create projections.

While research reports typically do not include complete financial statements, the reports often include important line items, valuation ratios, and financial metrics in tables which the analyst will reference in the commentary.

Evaluating trends is a big part of an analyst’s job; equity research reports discuss these trends. The report includes trends like year-over-year and quarter-over-quarter growth rates for metrics such as EPS, sales, and margins.

The trend analysis gives an excellent overview of the growth of the company. For example, suppose sales significantly grew year-over-year, but EPS was stagnant. In this case, the company may be facing higher expenses, and the analyst will dive into the financial results and attempt to uncover the cause of the problem.

Many equity research reports include a section that describes the risks the company and investors may encounter. These risks may include economic headwinds, an increasingly competitive landscape, and company-specific risks like failed product launches or management changes.

In-Depth Industry Research

While analysts are experts on the companies they follow, they are also experts on the companies’ industries. Equity research reports include the analyst’s evaluation of the industry trends, the competitive landscape, and how the company’s prospects align with changes within the industry.

Buy Side vs. Sell Side: What Role Do Both Sides Play?

Buy-side and sell-side firms play different roles in financial markets, and it is vital to understand the role of each.

Buy-side firms, such as hedge funds, pension funds and asset managers, have money to invest. They buy stocks and other investments and are fiduciaries of their client’s money. Sell-side firms, such as brokerage houses, sell investments to their clients, including buy-side firms.

Sell-side firms employ analysts that write equity research reports. The sell-side firms provide these equity research reports to their buy-side clients. Buy-side firms use these equity research reports to help make investment decisions.

Other Types of Research Reports

Analysts produce several types of equity research reports. These include initiation of coverage reports, quarterly results reports, flash reports, and sector and industry reports.

Initiating Coverage Reports

When a sell-side firm begins covering a stock, the first analyst report is called an initiation of coverage report. This report gives the analyst’s first take on a company and its stock. Many investors pay attention to initiation of coverage reports because they provide a fresh perspective on a stock.

Quarterly Results Reports

After a company reports its earnings, an analyst will issue a new research report incorporating recent results. The analyst discusses the results and what went wrong and right in the last quarter. The analyst will also calculate new financial projections based on the results, company guidance, and management commentary.

Related Resource: Portfolio Management: What it is and How Visible Can Help

Related Resource: How To Write the Perfect Investor Update (Tips and Templates)

Flash Reports

Analysts issue flash reports when significant material changes involving the company, or the company’s industry, occur. An analyst may issue a flash report if the company’s CEO resigns, the company initiates a significant stock buyback program, or other major news breaks. In a flash report, the analyst will discuss the relevant news and how it may impact the company and its stock price.

Sector Reports

Sell-side firms also issue sector reports. The sector reports will dive into trends within the sector, a high-level analysis of the top companies in the sector, and past and future predicted performance of the stocks within the sector.

Industry Reports

Like sector reports, industry reports discuss the competitive landscape and major players within an industry. An industry is a subset of a sector. For example, the technology sector includes the semiconductor, personal computer, and cloud computing industries. Industry reports focus on a narrower industry rather than a broader sector.

Equity Research Report Example

Although each sell-side firm has a unique style for presenting analysts’ research in equity research reports, most contain similar types of information. Let’s conclude our discussion of equity research reports by looking at a recent Microsoft report written by Argus analyst Joseph Bonner after the company issued its fourth quarter 2022 results.

The report starts with several tables of key statistics, such as financial and valuation ratios and the analyst’s investment thesis. The table also includes the analyst’s rating and target price for the stock.

The report continues with the analyst’s investment thesis for Microsoft stock. This thesis briefly explains the analyst’s rationale for his Buy rating on MSFT stock.

A section detailing recent developments within the company, which the analyst derives from the company’s earnings report and conference call, is followed by a look at select financial data. An analysis of growth rates for several key metrics like revenue and margins leads to an overview of risks that investors of Microsoft may face.

Equity research reports offer investors a great way to harness the power of Wall Street analysts. These analysts live and breathe the companies they follow. Investors can use their expertise to advise them in the investing process.

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of the top consultancies

of the top asset management firms

largest pharmaceutical companies

of the S&P 100

Traditionally considered a source of insight for sell-side firms, broker research and reports now provide critical insight for corporate and consulting professionals . In addition, corporate strategy professionals are increasingly turning to broker research to analyze market landscapes and better understand analyst assessments of market and industry trends, as well as performance of competitive peers.

However, manually finding broker reports and extracting the insights they contain requires significant time and effort—think multiple search engine queries and hours of combing through countless documents to identify important information. And even when you locate the right reports, broker research is often stuck behind frustrating paywalls.

The AlphaSense platform transforms the research experience by providing you with access to top broker research and other premium content and data sources , such as Wall Street Insights® , all within a single, centralized platform. 

With AI search technology supporting your research, you’ll also be able to quickly identify insights to uncover new opportunities, stay one step ahead of your market competitors, and deliver exceptional results for your clients.

Wall Street Insights®

AlphaSense provides global reports from 1,000+ research providers (comprised of sell-side analysts, strategists, and research teams) that cover companies, industries, asset classes, and economies. 

Our default proprietary offering Wall Street Insights® features equity research from the world’s leading brokerage firms including, but not limited to:

• Goldman Sachs
• Morgan Stanley
• Credit Suisse

Wall Street Insights® showcases both real-time and after-market research, is sourced from both broker partnerships and vendors, and covers North America, EMEA, APAC, and LATAM regions.

With Wall Street Insights®, you can conduct more comprehensive competitive analysis , improve client interactions, enhance internal research and strategy, and save your organization time and money with AI and automations. 

Broker Reports You Can Access on the AlphaSense Platform

On the AlphaSense platform, users can access several critical types of equity research reports, including:

• Upgrades/downgrades: published when a stock analyst changes their opinion of a stock, and subsequently, their investment recommendation
• Estimate / price target revisions: published when an analyst revises their previous price target (their prediction of the future price of a security)
• Initiation reports: published when a broker first begins covering a company
• Credit research
• All other company reports
• Industry reports – Analyze a set of companies within the same industry
• Fixed income reports – Demonstrate maturity distribution of portfolios
• Economic/macro reports – Shares analysts’ views on growth expectations, inflation, stock market volatility, and global market trade
• Commodities reports – Provide analysis of commodities within a particular industry, published weekly or monthly

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When you rely on an equity research platform that utilizes the power of AI search technology, you can be more confident in your research, knowing you are no longer at the mercy of human error. AlphaSense also allows you to automate certain research processes that previously would have required hours of manual work, streamlining your entire process so you can take action and make mission-critical decisions faster than ever. 

Here’s how our semantic search and smart automations can transform your workflow:

Smart Search

Smart Search technology doesn’t just recognize the keywords included in your query—it understands the intent behind your search, delivering content sources with the highest relevance and value to your search. It allows you to find all relevant data points with a single search, saving countless hours and increasing precision in your research.

Additionally, broker research is often inconsistently tagged because different firms may use different classification taxonomies, or include their own terms to define industries and trends. In addition to recognizing relevant language patterns, Smart Search assigns correct tagging to reports from thousands of analysts and research firms, regardless of which analyst published the report.

Smart Synonyms , our proprietary element of Smart Search, weeds out the sources that may include similar keywords but are not topically significant to your research, meaning you’ll never have to cut through excess noise to find the insights you need.

Relevance Rankings

AlphaSense automatically ranks results by their relevance to your research using a number of algorithmic factors, including search term proximity, Smart Synonyms, and document decay. You can be confident that the content sources at the top of your search results page are the ones most aligned with your current research needs.

Smart Alerts

Without a centralized search system, analysts are left to perform multiple manual searches and parse through Google Alerts for the ones with real relevance. On the AlphaSense platform, real-time alerts are customizable and can be set up for a particular company, industry, keyword, or topic (or a set/list of any of the above).

Customized alerts and watchlists give analysts real-time notifications about important news and updates while also ensuring they aren’t bogged down with alerts that are not in tune with what they really need (i.e. Google Alerts and other public search engine options).

Generative AI

AlphaSense’s generative AI is purpose-built for business professionals, leaning on 10+ years of AI tech development. Our proprietary genAI tool, Smart Summaries , generates insights across all four key perspectives—company documents, news, expert calls, and broker research. 

Sourced from across all broker research you are entitled to, published within the past 90 days, and covers sections including: 

• Upgrades and downgrades – Covers which brokers have upgraded/downgraded this company within the past 90 days and why 
• SWOT analysis – Covers the topics/trends identified as strengths/opportunities or threats/weaknesses from across broker reports about this company
• Competitive landscape – Covers the competitive landscape for this company from across broker reports

The Missing Perspective

Here at AlphaSense, we talk about market research in terms of the four perspectives . For every market-moving event, what are the perspectives of companies, news outlets, industry experts, and analysts on the topic? 

Historically, the latter has been the most challenging to access because companies needed to have existing relationships with specific brokerage or investment banking firms to get those insights. But with AlphaSense, you get easy access to multiple firms’ equity research, which allows you to take your research and strategic decision-making to the next level. 

Broker research reports have always been used by investors and hedge fund managers to come up with lucrative investment ideas and make smarter investment decisions. Now it is commonplace for cutting-edge corporations to utilize analyst perspectives in order to quickly get smart on market landscapes and understand analysts’ expectations on market trends, industry, and peer performance.

Here are just a few of the ways AlphaSense users rely on broker research to navigate ever-evolving market conditions and stay in the know about important trends:

Forecasting for the Future

In the interconnected world we live in today, economic, socio-political, and natural events that occur continents away can impact the success of your business. You need to know what market experts are saying about what’s happening in the world.

One of the biggest developments from the COVID-19 pandemic was the rise of virtual healthcare, or telemedicine. Using AlphaSense, our users were able to monitor rising mentions of the topic across all four perspectives, but it was specifically broker research that proved to be the most abundant source of information in the platform discussing the future of telemedicine, with analysts unanimously agreeing that healthcare systems will have no choice but to adopt telemedicine into their practices going forward.

Using broker research and our platform, we can forecast the trends and outlooks in the healthcare tech space for the future , based on current trends and analysis in areas like AI, medical robotics, and digital therapeutics

Following the Evolution of a Market Trend

ESG has been a dominant force in the investment world over the past several years. It was a trend that arrived forcefully and showed no signs of slowing down in importance to investors and consumers alike—until it did. 

Using AlphaSense, we were able to track the trajectory of the ESG movement—from its meteoric rise to the forefront of corporate discourse to its suddenly uncertain future as public scrutiny and distrust continue to build . 

Armed with the four perspectives, AlphaSense users were able to follow changing ESG dynamics and clearly understand the trend’s evolution, including shifting public and company sentiment and expectations. Broker research, in particular, was critical for staying ahead of these shifts. It not only informed users on all relevant information early on, but also gave interpretations and expert analyses of this information, allowing them to manage risk, capitalize on new opportunities, and gain a competitive edge. 

Peer Analysis

Peer analysis is critical for organizations to achieve and maintain dominance in their respective fields. This means accurately identifying and interpreting industry trends, opportunities, and threats, so you can respond quickly and effectively. AlphaSense helps you stay informed on your peers with customizable watch lists and alerts that notify you whenever a new investment research piece is published featuring one of the companies in your industry. 

When analyzing competitors, it is also important to understand what growth areas those companies are anticipating. By benchmarking competitors’ R&D investments , you can gain valuable insight into companies’ strategies and use that knowledge for your own strategic decision-making.  

Broker research provides instant access to sales revenue forecasts for specific products, as well as R&D percentage of sales for specific companies, and you can find every relevant equity research piece quickly and easily in AlphaSense.

Groundbreaking Insights from Industry Experts

Monitoring macro trends and conditions is essential for smart investing and apt decision making for any company. The broker research on AlphaSense provides consistent expert insight and direct commentary on economic trends, opportunities, and challenges, so that you can avoid being caught off guard by an unexpected market-shifting event. 

When the popular stationary bike company, Peloton Interactive, first announced its decision to partner with industry giant Amazon, many were blindsided. But those who were relying on the four perspectives available through AlphaSense were able to spot the telling signs and key milestones that led up to this deal . 

In particular, broker research in the AlphaSense platform showed that this decision was not unexpected at all, but rather played into Peloton’s overall strategy to recoup lost capital by spending less on digital advertising and relying instead on Amazon’s massive customer base.

Broker Research (also called Equity Research or Sell-Side Research) is developed by sell-side firms to help investors and hedge fund managers discover market opportunities and make informed investment decisions. Broker Research consists of detailed reports, models and estimates, videos, and podcasts covering companies, industries, fixed income, currencies and commodities, strategy, and economics. These reports focus on company financials, investment products, business strategies, potential deals, competition/peer analysis, and industry, country, or regional themes.

Broker research is developed by sell-side firms to help investors and hedge fund managers discover market opportunities and make informed investment decisions. Increasingly, this expert analysis is also being identified by forward-looking corporations as a highly valuable tool for informing strategic decision-making. With AlphaSense, corporations receive a best-in-class broker list, while financial services firms have access to an extremely competitive broker list.

You can subscribe to have access to a specific broker’s research content, and/or you can often purchase individual reports or documents you want to access. With a platform solution like AlphaSense, however, you can bypass individual subscriptions and paywalls to access research in a single, centralized place.

The “best” brokerage report depends on your specific needs and research goals. Top brokers in the research field include JP Morgan, Credit Suisse, Morgan Stanley, Barclays, and HSBC (among others) — all accessible on the AlphaSense Platform.

Check that the broker is registered with the SEC . You can also use FINRA’s BrokerCheck Database to research broker track records and credentials in-depth.

AlphaSense’s premium research database (including exclusive Wall Street Insights® ) offers comprehensive data combined with in-depth capital market expertise. 

Coupled with advanced AI-powered semantic search capabilities, analysts and researchers are able to access information faster, analyze market sentiment across multiple sources, and pinpoint the exact insights they need to inform decisions.

When you’re on the AlphaSense platform, you can say goodbye to individual subscription expenses, the need for manual, time-consuming research, and a reliance on outdated search methods (like CTRL-F) to find important insights.

AlphaSense provides access to many types of broker reports — industry analyses, flash reports, commodities reports, company analyses and more — from top names in the research field, including: 

• Morningstar
• Deutsche Bank

Try AlphaSense for Free

The AlphaSense platform offers access to premium content that powers confident research—you’ll have the tools, resources, and support you need to execute a full-scale strategy to drive results.

If you’re ready to level up your research for smarter investing, start by exploring all that AlphaSense has to offer.

5 Critical Content Sources for Conducting Market Research

Alternative Data

What’s The Best Way To Consume Broker Research?

Equity Research Reports: What’s In Them & How to Access

Private Equity Trends and Outlook for 2024

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• Equity Research Analyst: The Job
• Career Paths
• Educational Qualifications
• Advanced Positions
• Additional Qualifications
• Equity Research Analyst FAQs

Equity Research Analyst: Career Path and Qualifications

Equity research analysts work for both buy-side and sell-side firms in the securities industry. They produce research reports, projections, and recommendations concerning companies and stocks. Typically, an equity analyst specializes in a small group of companies in a particular industry or country to develop the high-level expertise necessary to produce accurate projections and recommendations .

These analysts monitor market data and news reports and speak to contacts in the companies and industries they study to update their research daily.

Key Takeaways

• Equity research analysts work for both buy-side and sell-side firms in the securities industry producing research reports, projections, and recommendations surrounding companies and stocks.
• Most equity research analysts have a bachelor's degree in finance, accounting, economics, or business administration.
• Having a background in statistics and mathematics is beneficial for equity research analysts.
• Senior equity research analysts often have a master's degree. A Chartered Financial Analyst (CFA) designation, awarded by the CFA Institute, is recommended for analysts who want to move up the career ladder.

What Does an Equity Research Analyst Do?

In a buy-side firm—such as a wealth management firm , a pension fund, or a hedge fund—an equity research analyst typically supplies information and recommendations to the firm's investment managers, who oversee client investment portfolios and make final decisions about what securities to hold.

In a sell-side firm, such as a brokerage or a bank, an equity research analyst typically produces reports and recommendations for the firm's sales agents. The agents then go on to use the information to sell investments to their clients and the general public.

Analysts generally spend less time on financial modeling and more time writing reports and developing recommendations.

Career Paths in Equity Research

Most equity research analysts begin in entry-level research associate positions after completing bachelor's degree programs. Research associates work under the direction of a senior equity research analyst creating financial models and conducting research. New hires may work with a variety of analysts over the course of months as a general introduction to the job.

Most research associates are eventually assigned to a single working group covering a small group of firms. With more experience and excellent performance, associates can move directly into analyst positions, taking more active roles in the research process.

Educational Qualifications for an Equity Research Analysts

To work in equity research , a candidate must have a bachelor's degree, preferably in a relevant business discipline such as finance, accounting, economics, or business administration. Undergraduate degrees that provide in-depth quantitative training are also good options, including degrees in mathematics, statistics, engineering, and physics.

A master's degree is not required to advance into senior analyst positions. However, a master's degree in business administration or finance can help pave the way for career advancement, especially advancement into portfolio and fund management positions. 

Many equity research analyst positions require a license from FINRA.

Non-business majors should consider taking some courses in finance and other business disciplines if considering a career as an equity research analyst.

Advanced Positions in Equity Research

After several years of working in junior positions, some analysts return to school to earn master's degrees.

Although, high-performing analysts may continue into more senior research roles without returning to school. A senior equity research analyst who has a high degree of expertise in their specialty area can move into an investment management role overseeing a research team and an investment portfolio.

A portfolio manager is responsible for using the information supplied by equity research analysts and other staff to manage the mix of securities in a portfolio daily.

Other Qualifications for Equity Research Analysts

The preeminent professional qualification for equity research analysts and others working in securities research is the Chartered Financial Analyst (CFA) designation, which is awarded by the CFA Institute .

This designation requires candidates to have a minimum of 4,000 hours of qualifying experience. Consequently, it is generally considered a qualification for advancement into more senior positions in the field. The designation requires candidates to pass a series of three examinations.

Many equity research analysts require a license from the Financial Industry Regulatory Authority (FINRA) , a national body charged with oversight of securities firms and brokers. The licensing process typically requires sponsorship from an employing firm, so most analysts complete license requirements only after hiring is complete.

How Much Does an Equity Research Analyst Get Paid?

According to GlassDoor, the average salary for an equity research analyst in the U.S. in 2023 is $114,225.

How Many Hours per Week Can a Research Equity Analyst Expect to Work?

An equity research analyst can expect to work up to 60 hours per week on a typical week, which can increase to upwards of 80 hours per week during earnings season.

Who Do Equity Research Analysts Work for?

Equity research can be divided into sell-side and buy-side firms. Sell-side analysts work for investment banks and brokerages and research stocks in order to provide investment recommendations for their clients and the public. Buy-side analysts research stocks to identify investments for their own firm to invest in.

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Seeing Is Believing

Sell-side Equity Research in a Nutshell

Updated: April 2 2023

By: Noah Edis

There’s a reason Wall Street banks are known as “The Sell-Side” – it’s because their primary business is to help companies raise money by selling stocks and bonds. And the people who work in this division are called equity researchers, or just “analysts.”

Their job is to study individual companies and figure out whether they’re a good investment. They track things like earnings, revenue, and profit margins, and then make reports for their clients to guide them about whether or not to buy or sell shares of that company’s stock.

But it’s not just about picking winning stocks. Equity researchers are also responsible for coming up with new investment ideas and helping to shape the overall market outlook. To do that, they need a solid understanding of financial statements and accounting concepts, as well as experience in fundamental analysis and valuation.

But how does this impact your investment choices? Let’s take a closer look.

What Do Sell-Side Equity Research Analysts Do?

Sell-side equity research analysts are responsible for providing analysis and reports for clients, typically institutional investors such as hedge funds, mutual funds, and pension funds.

The sell-side equity research department is responsible for the generation of new ideas and the production of high-quality analysis. The department is usually divided into sector teams, each of which covers a particular industry or group of companies.

These are analysts and associates. Analysts are the people who produce the actual research reports, while associates support them by conducting fieldwork, gathering data, and performing other tasks.

Their work process can be categorized into three main tasks:

• Information Gathering

Sell-side equity analysts are responsible for gathering information about the companies that they cover. This includes both financial information and non-financial information.

Research analysts can obtain financial information from a variety of sources, including company filings, earnings calls, and analyst presentations. On the other hand, they can gather non-financial information through fieldwork, such as meeting with company management or visiting factories.

Once the necessary information has been gathered, it must be analyzed to make investment reports. This analysis typically takes the form of financial modeling, which is used to forecast a company’s future performance.

• Report Writing

Sell-side equity research reports contain information on companies’ past performance, current situation, and future prospects. It also includes the analyst’s rating (e.g., buy, hold, or sell) and price target for the stock. The reports are then distributed to the firm’s clients to help them make investment decisions.

Buy-Side vs. Sell-Side Analysts: What’s The Difference?

The main difference between buy-side and sell-side analysts is the type of client that they work for. Buy-side analysts work for institutional investors, such as hedge funds and mutual funds. Meanwhile, sell-side analysts work for banks and other financial institutions.

Another difference is the type of research that they produce. Buy-side analysts tend to produce more in-depth, fundamental research. In contrast, sell-side analysts tend to produce shorter, more concise research reports.

A final difference is the compensation structure. Buy-side analysts are typically paid a salary plus a bonus based on their performance. On the other hand, sell-side analysts are typically paid a salary plus a commission based on the number of research reports they sell.

What Is The Difference Between Equity Research And Investment Banking?

There is some overlap between equity research and investment banking, as analysts at investment banks may also do research on companies. However, the two functions are separate, and analysts typically specialize in one or the other.

Basically, investment bankers are responsible for helping companies raise money by issuing and selling securities. Equity researchers, on the other hand, provide analysis of publicly traded companies.

What Is The Difference Between An Analyst And An Associate?

An analyst is typically the title given to someone who has been working in equity research for a few years and has gained some experience. In contrast, an associate is someone new to the field and still learning the ropes.

Analysts typically have more responsibility than associates, such as creating reports and making client presentations. They may also be involved in meeting with company management and other investors.

Associates typically assist analysts in their work and learn from them. They may also have some responsibility for creating reports, but their primary role is to learn about the industry and the market.

What Is a Sell-Side Equity Research Report?

An equity research report is a document that provides an in-depth analysis of a particular stock. The report typically includes a company overview, financials, valuation, and analyst commentary.

The main purpose of an equity research report is to help investors make informed decisions about whether or not to invest in a particular stock. The report should provide an objective overview of the company’s financials and valuation, as well as the analyst’s opinion on the stock.

Here are the typical components of an equity research report:

• Company overview – This section provides a brief overview of the company, including its business model, key products and services, and competitive landscape.
• Financials – This section includes a detailed breakdown of the company’s financial performance, including revenue, operating income, net income, and EPS.
• Valuation – This section provides a valuation of the company, including its price-to-earnings (P/E) ratio and enterprise value-to-EBITDA (EV/EBITDA) ratio.
• Analyst commentary – This section includes the analyst’s opinion on the stock, including whether or not it is a buy, sell, or hold.
• Investment risks – This section discusses the key risks associated with investing in the company.
• Catalyst – This section includes a discussion of the key events or factors that could impact the company’s stock price.

Different types of sell-side equity research reports

There are three main types of equity research reports:

• Top-down analysis – This type of report starts with a macroeconomic overview of the market, then drills down to individual sectors and companies.
• Bottom-up analysis – This type of report starts with a detailed analysis of individual companies, then drills up to sector and market level.
• Hybrid analysis – This type of report combines elements of both top-down and bottom-up analysis.

Why Sell-Side Equity Research is Valuable

Sophisticated professional investors.

The main customers of sell-side equity research are professional investors, such as money managers, hedge funds, and pension funds. These investors rely on research reports to help them make informed investment decisions. Outside suggestions may be of limited value because you will almost definitely do your own due diligence before investing.

Mitigate Risk

One of the primary goals of sell-side equity research is to help mitigate risk for investors. By providing accurate and timely information, analysts can help investors avoid making costly mistakes in their stock picks.

Get an Edge on the Competition

Many professional investors subscribe to multiple research reports to get a broad overview of the market. This gives them an edge over investors who only rely on their own analysis.

Get Unbiased Information

Remember that analysts are not always right about their analyses. However, by subscribing to a variety of research reports, you can get a more balanced view of the market and make better investment decisions. In addition, sell-side equity research informs investors of the latest news and developments in the constantly changing equity market.

Enhanced Corporate Access

Regulations make it impossible for corporate management teams to selectively provide important information to investors, posing a problem for huge fund managers who frequently require precise information when appraising a stock.

To get around this, fund managers frequently attend meetings sponsored by sell-side companies with contacts with executives of their research subjects, where they may meet company management teams.

Sell-side businesses’ institutional customers can also convey the most important issues they wish to see addressed by corporate management in quarterly earnings conference calls and reports.

Idea Generation

Sell-side equity research reports can be a valuable source of investment ideas. By reading these reports, you can get a better understanding of the companies that interest you and the stocks worth watching.

Creating Context

For skilled investors, reports may be most valuable as a way to establish a meta viewpoint. Short-term variables significantly impact stock values, so investors may learn about price fluctuations by keeping an eye on the whole research environment.

Consuming research also enables investors to assess the temperature of the sector and compare current conditions to previous happenings. In the market, history tends to repeat itself, thanks in part to the industry’s inclination to shake during collapses and attract new professionals during bull runs.

Having a detached viewpoint can help illuminate cyclical tendencies, making it simpler to spot alarming signs that might otherwise go unnoticed by the untrained eye. As a result, new investment possibilities are generated.

That said, investors should avoid research that just reinforces their own prejudice – a powerful factor that has undoubtedly contributed to market booms and collapses in the past.

Challenges When Choosing a Sell-Side Equity Researcher

Many analyst reports are available for free on the internet. The sheer number of firms providing sell-side equity research can be overwhelming for investors.

So how can you determine which research reports are worth your time and money?

Here are a few factors to consider when choosing a sell-side equity research analyst:

• Consider the firm’s reputation

First is the reputation of the sell-side equity research firm. Does the firm have a good track record? Are its reports well-regarded by other investors?

• Consider the analyst’s experience

Second, consider the experience of the analyst who wrote the report. How long has the analyst been covering the stock? Does the analyst have a good track record?

• Consider the firm’s coverage universe

Third, consider the firm’s coverage universe. Does the firm cover a lot of stocks or just a few? If the firm only covers a few stocks, is your stock one of them?

• Consider conflicts of interest

Fourth, be aware of any potential conflicts of interest. Does the firm have a banking relationship with the company? Does the firm’s parent company have a business relationship with the company?

• Consider the price

Finally, consider the price. How much does the report cost? Is it worth the price for the information it provides?

These are just a few factors to consider when choosing a sell-side equity research analyst. Ultimately, you should use your own judgement to decide which reports are worth your time and money.

However, what if there’s a way to view all these analysts’ price targets and ratings in one place?

Welcome to AnaChart. AnaChart is the only website that shows analysts’ past and present action. Other sites present current price targets, but none show previous ones for users to get context other than AnaChart.

Easily find and follow any analyst that outperforms the market. AnaChart assists you in determining which analyst price goals and ratings are essential so that you can feel more confident in your investments and spend less time worrying.

AnaChart’s simple, elegant design makes it easy to find and track the analysts you care about. Simply enter a ticker symbol to view an interactive chart of the stock price over time.

By comparing it to the previous day’s close, you can also see how much the stock has risen or fallen above and below the strike price over time.

You can also view the price target history for each analyst. This way, you can quickly and easily see how accurate the analyst has been in the past and get an idea of whether or not their current ratings are likely to be accurate.

In addition to price targets, you’ll also see analyst ratings (strong buy, buy, hold, underperform, sell) on the chart. This lets you quickly see how bullish or bearish the analysts are on a particular stock.

Also, outside ratings and price targets, you will get the following:

• Line per analyst per stock — separately and together
• Duration since the last posted price target
• The frequency of stock prices realizing price targets
• The average time it takes for price targets to be realized
• Performance scores for stocks so you can identify which analyst model works best
• Statistics regarding average success on analysts price targets fulfillment and average duration in doing so

AnaChart is the only website that provides all this information in one place. So, if you’re looking for an easy way to find and follow the best sell-side equity research, AnaChart is the place to go.

Life on the Sell Side: All About Equity Research

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When you step back and compare buy side and sell side equity research side by side, the similarities are numerous. Both involve researching and analyzing companies  to generate investment recommendations. The only real difference is the end-user of the research.

Given the similarities, I thought I’d go right to the source and get the scoop on sell side equity research – from what it takes to break in to compensation to eventual exit opportunities.

Today’s interview is with a sell-sider who has worked at both an independent boutique research firm and a large Wall Street investment bank, so he can offer a broad perspective.

There’s a lot of valuable information here, so I decided to break the interview into two parts. Part 1 will cover the interviewee’s background as well as an in-depth review of what equity research is and what it’s like being an equity research analyst.

Part 2 will cover the really juicy stuff like recruiting, breaking in, compensation, and exit opportunities.

Let’s dive right in…

Q: OK, first things first: Tell me a little about your background and walk me through your resume.

Pre-resume, my father is a hog futures trader at the CME , so analysis and public markets were a part of my upbringing. I attended a small liberal arts school and earned a BS in Accounting. I chose Accounting because it seemed like a good foundation for anything in business, which was about as far as I had made it career planning at that point.

I quickly discovered that a big drawback at small schools is the lack of alumni network, so job searching was more difficult. A headhunter placed me in a job as a property accountant for a real estate company that owned warehouses. This was my first job out of undergrad. I worked there for three years until the portfolio was sold to a major industrial REIT.

After the sale of the company, it became immediately clear that my days were numbered. My office was full of graduates from a nearby top real estate MBA program, so I decided to go back to school and make a career out commercial real estate .

I went back to get my MBA with the intent of becoming a developer, but I was quickly neck-deep in finance and loved the challenge. I took part in a REIT analysis program where we, three other smart guys and me, hacked our way through nine months of managing a million dollars invested in REIT securities. We even somehow managed to beat the market during that short time period.

It was Money Management 101 and I was hooked.

Using our alumni network, I landed a job with a top boutique REIT-only sell side research firm and went to work. After a few years on the job I became burned out from the long hours, no weekends, and shitty company culture. I needed to get out.

So, after a short work hiatus, I re-joined my former boss at another firm. I was doing the same thing but in a better work environment.

Q: Wow, you left no stone unturned walking me through your resume. Now that we know your background, let’s get started with the basics of the business: What exactly is sell side equity research?

Sell side equity research creates value for the buy side by being the go-to source for detailed and accurate company and industry knowledge, trading ideas, and company management access.

Sell side equity research makes money indirectly, primarily through commissions generated when the buy side trades through the sell side trading desks. You see, research is one (very important, I might add) part of a three-part team that also includes sales and trading .

Basically, research creates value by generating trading ideas (or arranging tours, industry expert discussion panels, company management meetings, etc.) and sales relays those ideas on the phone to buy side clients  and trading talks to their buy side trading counterparts to get the trades that earn the commissions that get us paid.

Sounds simple so far…right? Well, if you decide to take a hack at this business, know that each firm has its own specialty or niche and it might mean the difference between loving your job and hating it.

Here’s what I mean: Some firms are all about getting down to the nitty-gritty details and finding that little nugget of information in the back of an SEC filing that makes a difference in valuation.

Alternatively, the company might put on great investor events, bringing in the top experts to share their outlook, or they might provide meetings with hard-to-access management teams, or any other niche that the buy side will find valuable pay for through increased trading.

Q: That’s a valuable nugget of information for would-be sell side analysts. How would a prospective sell-sider find out in which niche the research firm specializes?

In an interview , it really boils down to asking the right questions to find out if it is a good fit for you. Some example questions to help you out:

What do your buy side clients say you do better than your competitors?

How much have your trading commissions grown over the last few years and how does that compare to the peak over the last decade?

Where do you see the greatest opportunity today to better serve clients and increase trading revenues?

The answers to these questions will help to gauge the firm’s reputation – as well as where you can add value – and if the company is even focused on what interests you.

Q: You’ve managed to work at both a boutique and a bulge bracket firm. What are the differences between bulge bracket and boutique shops from an equity research perspective?

Bulge bracket shops seem to be more focused on maximizing the number of companies under coverage.

Boutique shops, in my experience, dig deeper on specific names, and are more academic, theoretical, and model-focused.

Q: Interesting. What about your daily routine? Take me through a typical day  in the life of a sell side equity research analyst.

As far as daily routine, when it’s not earnings season, I usually get into the office around 7:15 AM and scour for any news stories that might affect my companies while listening to the morning research call. After that, it’s time to jump into longer-term projects, topical reports or initiation reports.

Throughout the day, there are emails and phone calls and news events that will interrupt your work, requiring quick analysis and write-up. I may be on the phone with a client who has a question about my model, or wants to know the risk factors on a company that we cover, or our take on a recent news event.

In addition, when any SEC filings are released or there are company news releases, it may mean a formal note needs to be published and sent out to all clients which means I’ll need to draft that as well. If this happens after the market closes, it could mean a late night. On a normal day, though, I leave at about 6PM.

During earnings season (2-3 weeks every 3 months), the hours get longer, usually from 7AM to 9PM with some time to catch up over the weekend. Each company reports and holds a conference call, and so we update the models and write two published notes on each company.

Q: Earnings season isn’t very fun on the buy side either given the inflow of new information.

[To be continued]

LBS Note:  Check out  Part 2 of Life on the Sell Side where we discuss breaking in, recruiting, compensation, and exit opportunities.

Share this:

Cool site,finally something for prospective ER guys!! A few simple questions with very complex answers I suppose.How do you find the next big thing?Can you only look in the sectors you cover etc?If everyone covers say APL or GOOG, how can you become very good at what you do? Is the only thing that matters in sell side ER short term trading revenues or does the long term also come into play, say 3/5 year views?

Lots of questions, in order:

1) If anybody knew the answer to that, they’d never share it with anyone. 2) Yes, you cover a specific sector with a specific set of names. On the buy side, you will find generalist investors that can invest in any sector or name. 3) You can always stand out if your research calls are good. Just because everyone covers AAPL or GOOG doesn’t mean everyone needs to have the same view on the stock. 4) Trading revenues are the result of good calls over time. Perennial II ranked analysts draw in consistently higher trading commissions year after year. It’s your long term track record that matters the most because your become a trusted source.

Is it not strange that not more emphasis is placed on objectively measuring returns from tracking exactly analysts’ calls?

Granted that “whispers” and servicing buy side clients are significant aspects of an analyst’s function – hence the obsession over rankings in brokers polls e.g. II or AsiaMoney (on this side of the world).

But would not an objective ranking of analysts based on their written and published calls be a more important metric to look focus on?

Bloomberg has its ANR function which does the above half heartedly, and when rankings are published in the financial media some references are made to good calls etc; however i’ve yet to see theoretical portfolios built exactly on analysts’ calls and hypothetical returns updated and published regularly for investors’ consumption though. Or am i missing something here?

Thanks in advance for your kind views.

The better shops do sometimes track model portfolios, which adds a lot to credibility, but ultimately it’s up to the buy side to deliver performance (i.e., make good investment calls) and the sell side to deliver good research.

Would it not make sense then, that for each individual named analyst, model portfolios be tracked based solely on recommendations published?

While shops would benefit from knowing which sell-side analysts to take seriously; i’m sure analysts would just love the idea of having a daily updated score next to their name, ranked against their peers…

Above also arises from larger question – on average, do portfolios constructed based solely on sell-side analysis outperform?

Can I make an Equity Research Career without MBA finance, since I have MBA IT with Business Analyst experience in IT firms. I have enrolled for an Equity Research program from NSE. I need your advice, whether I am on right track to start an equity research career.

Yes, your IT background makes you very qualified for a career in ER since you’re probably very familiar with MS Excel and MS word. Your ER program from NSE is a mistake, you should drop out immediately; personally I think pursuing a MS in computer science could help your chances as it will demonstrate advanced computer skills and analytical problem solving abilities.

Honestly, you seem like an ambitious person. Send me your resume. My email address is [email protected] . I would be glad to help any way possible since we do get very nice referral bonuses.

Similar to Renjith above, I was looking for some advice on how to break into a career within equity research. I have undergraduate and masters degrees in quantitative economics but am struggling to break into junior/entry level roles within the industry without any direct investment banking experience. Since graduating two years ago, I have been working as an analyst at an industry leading economic and financial litigation consulting firm, where I have been carrying out many tasks that overlap and fall in line with tasks typically carried out by analyst/associate roles in ER. Any advice you may be able to offer would be greatly appreciated. Thanks so much.

Very informative post. Thanks for sharing your views. I came across this blog a few days back which outlines some real nice ideas and information on Sell Side Research

Hey, I want to understand the factors that are undertaken by sell side analysts while choosing stocks for coverage. Is there any bias followed in the market?

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Is there a single source where I can buy Sell-Side Research reports . there are some research reports that I can buy on finance.yahoo but they don't offer reports by all the analysts covering a company.I heard that lot of sell-side shops sell their research through Reuters but you need to be a Reuters customer to be able to purchase those reports. Any idea where i can buy a research report on a specific company issued by a specific analyst etc ..

First off, no sell side report is worth buying. I have read hundreds and not one is worth half of what they sell for. Most sell for around $40-60. However, I no longer have access to the databases or I would send you one for free.

Also, you must have a friend or family member in the stock market business and if so have them send you one.

Lastly, it would be a better investment to drop some money in a E-Trade or Fidelity account and gain access to the research. You can then withdraw all of the money and your done. Starting account costs $0 and it takes less than 20 minutes.

Our bankers are always sending us shit, some of it good but the majority of it is obsolete by the time I get through it anyway. I agree with setting up a brokerage account that offers research as it is included in your membership. We live in an age where information is constantly changing and printed information becomes obsolete very quickly. You can do your own research by reading K's & Q's and following Bloomberg , CNBC , etc and you will have just as good a perspective as if you received sell-side materials.

Analyst reports are only good to point to as an information source to support whatever you want to say. You don't like what one analyst says, pick a different one!

if you want to make a habit of it lets make a deal

You can reach me at [email protected] .

We don't sell our research just like that. That's what our clients pay for.

Yes, most research out there is awful. But that's how I make money - the rest of you are plebs.

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