What is Research Analysts?
1533 reads · Last updated: December 5, 2024
A research analyst is a professional who prepares investigative reports on securities or assets for in-house or client use. Other names for this function include securities analyst, investment analyst, equity analyst, rating analyst, or simply "analyst."The work conducted by the research analyst is in an effort to inquire, examine, find or revise facts, principles, and theories for internal use by a financial institution or an external financial client. The report an analyst prepares entails the examination of public records of securities of companies or industries, and often concludes with a "buy," "sell" or "hold" recommendation.If the research analyst is involved with an investment bank or a securities firm controlled by a member organization of the Financial Industry Regulatory Authority (FINRA), they may be required to register with a self-regulatory organization (SRO) and/or take certain exams.
Definition
A research analyst is a professional who prepares reports on securities or assets for internal or client use. Other names for this role include securities analyst, investment analyst, equity analyst, rating analyst, or simply 'analyst'.
Origin
The role of research analysts evolved with the development of financial markets, dating back to the early 20th century when there was a growing need for professionals to analyze and predict market trends. Over time, the role became more complex and specialized, especially in the late 20th century with advancements in computer technology and data analysis tools.
Categories and Features
Research analysts can be categorized based on their focus area, such as equity analysts, bond analysts, and industry analysts. Equity analysts focus on individual company stocks, bond analysts on debt securities, and industry analysts on overall trends within specific industries. Each type of analyst requires specific knowledge and skills to accurately assess the value and potential of their research subjects.
Case Studies
A typical case involves analysts at Morgan Stanley, who provide investment advice on the technology sector through in-depth market research and data analysis. These analysts help investors make informed decisions by analyzing market trends, company financial statements, and industry dynamics. Another example is analysts at Goldman Sachs, who focus on emerging markets, offering investment advice by studying economic indicators and political environments in these regions.
Common Issues
Common issues investors face when using research analyst reports include interpreting analyst recommendations (such as 'buy', 'sell', or 'hold') and assessing the accuracy of analyst forecasts. A common misconception is that analyst recommendations are absolute, whereas they are actually the best judgment based on current data and market conditions.
