An equity research analyst, such as a sell-side analyst, monitors trends in assigned industries and oversees research on target companies. Their goal is to recommend what stocks investors should buy or sell through providing accurate research data. Buy-side analysts usually work for hedge or mutual funds and sell-side analysts work for research firms and investment banks. Both produce valuable data that direct their client’s investment strategies and decisions.
Sell-side Equity Research
Sell-side equity research offers valuable trading ideas, company insight and industry knowledge. Sell-side analysts indirectly make money through commissions earned when the buy side trades through trading desks. They are members of teams that include sales and trade personnel. Side-sell research creates value by sharing trading ideas that result in company tours, industry discussion panels and company management meetings. Sales staff promote these ideas with clients and fuel interest in target investments.
Some sell-side analysts focus on hidden details within SEC filings that make a huge difference in valuation, while others focus on marketable data that can be used during investor or management events. All of these analysts must showcase their calls on the stocks and diligently communicate sell recommendations to clients. They must be able to clearly explain why certain stocks should be included in the client’s portfolio. They must stay up to date with the latest sector, company and industry news.
Junior analysts will usually work under the direction of an Associate analyst. They mostly work with data in Excel spreadsheets that they collect through primary research and industry research. They maintain internal databases that are used to create graphs, charts and financial models. Associate analysts usually have at least three years of experience. They manage current financial valuation models by verifying the data and highlighting risks and opportunities. They work on various client requests related to data requests and industry analysis reports.
Senior sell-side analysts usually are assigned a sector with 8 to 15 stocks. They actively track these stocks and attempt to maximize the number of companies covered in the sector. Most senior analysts cover companies that investors want to invest in, such as companies with high market capitalization and high trade volumes. Their most important responsibility is to come up with a quarterly results update that details expectations against performances.
How To Become One?
Sell-side analysts will usually have master’s degree in finance or investing. Some choose to pursue an MBA or graduate degree in business administration. Although a degree in a financial discipline is not required, candidates must have a strong understanding of financial markets and excellent analytical and quantitative skills. The will also need to have impeccable verbal and written communication skills.
Sell-side analysts tend to be highly creative, focused and curious. Their sharp research instincts usually complement their innovative problem-solving abilities. Proficiency in Microsoft Excel, Visio and PowerPoint is expected. Most employers will expect candidates to obtain and maintain the Chartered Financial Analyst (CFA) designation. This certification is offered through the CFA Institute, which also offers a Certificate in Investment Performance Measurement (CIPM) exam.
A sell-side analyst is a financial professional who guides investment decisions for financial companies.
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