FLASH SALE! - "FINANCIAL MODELING COURSE BUNDLE AT 60% OFF" Enroll Now

Equity Research

Updated on April 30, 2024
Article byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Equity Research?

Equity Research refers to the process of analyzing a company’s market position to assess the investment opportunities available there and help investors get a clear picture of the business and organization before they finally invest in it. It primarily involves analyzing the company’s financials, performing ratio analysis, forecasting, and exploring scenarios to help make a BUY/SELL stock investment recommendation.

Equity Research

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: Equity Research (wallstreetmojo.com)

After the analysis and research is thoroughly conducted, equity research analysts put forth their observations in the form of equity research reports.  Once investors consider a company to invest in, the equity research people look into the economic aspects like GDP, growth rates, the market size of the industry and the competition aspects, etc. to assess how worthy they are for an investment.

Equity Research Explained

Equity Research involves preparing an estimate of the company’s fair valuation to recommend the buy-side clients. The equity research job rewards analysts with relatively higher compensation, but it also provides excellent exit opportunities. Though, as a research analyst, one may spend 12-16 hours a day at the office; however, this is a dream job for many who love finance and financial analysis.

Equity research is the division of investment banking firms. This section of the firm, as the name suggests, take care of the updates on the firms their clients desire to invest in. The analysts here follow a series of steps to analyze the businesses in the most efficient way to ensure the information forwarded to the investors are accurate and reliable.

The research division explores every aspect of a business and study the companies’ financial track records. From historical patterns to current involvements, the professional take into consideration everything to make sure they do not mislead clients in any manner. From the GDP to the market size to the regular cash flows, etc., the professional observes everything possible.

Equity research is all about finding the valuation of a listed company (Listed companies trade on a stock exchange like NYSE or NASDAQ etc. Once the professionals understand the economics behind the business, they perform the financial statement analysis of the historical balance sheet, cash flows, and income statement to form an opinion on how the company did in the past.

Once they accomplish their part of research, they mention all their observations in an equity research report.

Equity Research plays a critical role in filling the information gap between the buyers and sellers of shares. All levels (individual or institutional) may not have the resources or capabilities to analyze every stock. Additionally, full information is not provided by the management, due to which further in-efficiencies are created and stocks trade below or above the fair value.

Equity Research analyst spends a lot of time, energy, and expertise analyzing stocks, following the news, talking to the management, and estimating stock valuations. Also, equity research tries to identify the value stocks out of the massive ocean of stocks and help the buyers to generate profits.

An independent equity research firms do not have a trading and sales division. They perform financial analysis with the idea of charging fees on a per report basis. On the contrary, for major equity research firms, fee income is earned by brokerage trades (Soft Dollars).

Financial Modeling & Valuation Courses Bundle (25+ Hours Video Series)

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.

Roles

Equity research jobs come in various forms. To understand the responsibilities that one gets exposed to when they join this division of investment banks, it is important to study the roles offered in the field. Let us have a quick look at them below:

Head of Research

The Head of Research acts as a key member to manage the Equity research analyst team, providing the team with leadership, coaching, and guidance to ensure that the brokerage goals and objectives are met. They perform the following functions:

  • They oversee research reports, publications; it’s editing and monitoring the process of analysis and brokerage recommendations.
  • They ensure that adequate support is provided to sales and trading teams.
  • The heads contribute to equities by providing expert-level inputs for overall strategy, goals, initiatives, and budgets.
  • They are responsible for Analyst hiring, compensation, development, and performance management.
  • They act as a link between fund managers and the research teams.

Senior Analyst

Below is an excerpt from a job requirement for a Senior analyst –

Senior Analyst Job Description

source – FederatedInvestor

  • Typically an equity research senior analyst would cover a sector with not more than 8-15 stocks. Coverage implies tracking these stocks actively. Senior Analyst tries to bring maximum companies under coverage in the sector they track (initiating the coverage)
  • Many senior equity analysts cover companies that investors may want to invest in. These companies are like the high market capitalization companies or those with higher trading volume. There could also be cases where investors want to invest in small-cap or mid-cap stock companies with fewer analysts’ coverage.
  • One of the most important responsibilities of a Senior Analyst is to develop a Quarterly Results Update – results from summary, expectation, and performance against those expectations, updating forecasts, etc.
  • They talked to the clients (buy side) and showcased their calls on the stocks. They have to communicate buy-sell recommendations of stocks diligently. Additionally, they have to articulate clearly why a certain stock should be included in their portfolio.
  • Write important industry event updates like conferences or management meeting updates.
  • To update the Sales team, deal with the trading team about the latest news in the sector and the company, and keep them updated with the brokerage’s view.
  • Attending conference calls for important company updates, results, etc
  • Attend trade shows, meet company management, suppliers meetings, etc.

Associate

Below is the summary of the Associate job description from efinancialcareers

Associate Position
Associate Responsibilities
  • The primary job is to support the Senior Analyst in the best way possible.
  • An associate has prior experience of around three years or so in a similar industry.
  • Updating the financial model, verifying the data, and preparing the valuation models.
  • Working on various client requests like a request for data, industry analysis, etc.
  • Prepare draft Equity Research Reports (update of results, events, etc.)
  • Work on client requests
  • Participate in meetings and calls with clients on the stock under coverage.

Junior Analyst

Here is a snapshot of the Junior Equity Analyst’s responsibilities.

Junior Analyst Responsibilites

source – careers.societegenerale.com

  • The main responsibilities of a Junior Analyst are to support the Associate in every format.
  • The majority of the work done by Junior Analysts is related to data excel etc.
  • Also, Junior Analysts may be involved in doing primary research, industry research, coordinating with clients, etc.
  • We maintain the industry database, charts, graphs, financial models, etc.

Equity Research Video Explanation

 

Hierarchy

Now when the roles and responsibilities of each of the professional employed in the equity research division of the investment banking firm is known, it is important to note the hierarchy. This helps understand who is monitored by whom and how it all works step by step:

  • A typical hierarchy at an Equity Research firm starts with the Head of Equities/Head of Equities at the top.
  • After that, there are Analysts (seniors) covering different sectors. Each analyst mostly covers around 10-15 companies in a specific sector.
  • Each Senior analyst may be supported by an Associate, who a couple of Junior Analysts may support.
Equity Reserach Hierarchy

How To Do?

Equity Research analysts follow stocks and recommend whether to buy, sell, or hold those securities using fundamental analysis. Equity Research is a very challenging job, where an analyst may be required to spend more than 12-14 hours a day.

For creating a professional Equity Research Financial model, an expert analyst’s recommended approach must follow the below-mentioned steps:

Industry Analysis

The first thing to take care of while doing a professional analysis is learning about the economic parameters affecting the industry. These may include factors, like the industry dynamics, competitors, etc. From how a firm deals with its competitors and strategize policies to improve and be the first choice of end users to how it adapts to the latest trends and advancements, everything falls under this step of equity research.

Fundamental Analysis

Fundamental analysis includes studying the role of management in the form as well as studying the financial statements of the business. The equity firm professionals have the liberty to ask questions from the management directly, which the investors cannot. Hence, having a dedicated equity research team is highly recommended to individual and institutional investors.

When it comes to studying the financial statement, be it a balance sheet or cash flow statement, the analysts try to have a separate sheet to reflect the performance as depicted by those statements. The most important steps here is to perform a ratio analysis of the company under consideration. Let us check the following example depicting how ratio analysis was carried out for Colgate’s historical years:

Colgate Ratio Analysis - Operating Profitability

Forecasting

In the report, the analysts also provide a forecast, thereby guiding investors of the pros and cons of investing in the company they have been considering for so long. This conclusion is derived on the basis of how they decipher the information gathered. The professionals consider the industry size and growth, market share of the company and its revenue generated to derive their conclusions.

  • Company management does not provide the future financial projections of the company. Therefore, a research analyst needs to project this data. Forecasting the financials of the company is known as Financial Modeling. I earlier wrote a 6000-word step-by-step tutorial on Financial Modeling. If you want to master Financial Modeling, you can refer to this Financial Modeling Tutorial.
Completing the Balance Sheet

Valuations

Valuation is the next step in the process. In the process, the analysts evaluate the company’s net worth. This is done in two ways – by considering the Discounted Cash Flow (DCF) or by figuring out the relative valuations. Once the financial model is ready, analysts calculate DCF, which is the valuation method determining the value of the investment that one is supposed to make with respect to the future cash flows as expected.

Alibaba FCFF

Relative valuation, on the other hand, is based on comparing the company’s valuation under consideration with the valuation of other firms.

Box IPO Comparable Analysis Comp

The common approach the analysts follow to figure out the relative valuations is given below.

  • The professionals identify the comparable based on the business, market capitalization, and other filters.
  • They, then identify a suitable trading valuation multiple to be used for this business.
  • The analysts use the average valuation multiple to find the valuation of the company.
  • In the last step, they suggest Undervalued or Over-valued.

Research Report

Once you have prepared the financial modeling and found the fair valuation of the company, the analysts communicate this to clients through the research reports. This research report is very professional and is prepared with a lot of caution. Plus, it contains recommendations, guiding investors or clients of what return they could expect the investment to generate in a specific time period.

Examples

Let us consider the following examples to understand the equity research definition and how does it work:

Example #1

Suppose Jenny asks John to invest in her company X, which has been operating in the market for over 10 years. Though it has not been a dominant market player, the growth or performance of the company has been consistent. For the sake of friendship, John could agree to make the investment, but he decides to assess the maximum risk associated with the deal.

For risk assessment, he contacts an investment banking firm to conduct thorough research and let him know the possibilities. The firm assigns the task to a dedicated equity research team, which ensures John of the same consistent growth, indicating investment in X would not be too risky as the company has been showing a positive growth throughout its journey.

Hence, John agrees to invest in Jenny’s company.

Example #2

On November 07, 2023, Marathon Capital LLC announced establishing its equity research division with an aim to study and observe the constantly transitioning global energy for establishing a clean economy, which it has always wanted to set up. The team has selected members for the venture, who are expected to leverage this product. This team would utilize its prior skill along with their experience in the clean energy sector to conduct research and make the firm, one of the most dominant players in the finance industry.

How To Get Into Equity Research?

When it comes to entering the field of equity research, there are few criteria that an individual must fulfill. Whether one is willing to join this division of investment banking firms as an analyst or as an associate, there are requirements to meet.

For holding a position in the equity research field, one must possess the following skill sets qualifications:

Associate Qualifications

Key highlights to note from this excerpt is –

  • MBA is a plus (not a necessity). If you are an MBA, you have certain advantages, but if you are a graduate, you should not get disheartened. You have a chance if you prove your interest in finance. Please look at Can an engineer get into an Investment Bank?
  • Financial discipline is not essential, but you must have a strong interest in the financial markets with excellent quantitative and analytical skills.
  • You should be fluent in English and have excellent verbal and written communication skills.
  • You possess intellectual curiosity, focus, and creativity and have a keen research instinct with creative problem-solving abilities.
  • Strong proficiency in Microsoft Excel and Powerpoint
  • CFA designation – This is one important designation that the finance industry respects. Try to ensure that you take the CFA examination and pass at least a couple of levels.
  • Other top skill sets required to enter the Equity Research Industry are –
  1. Excel Skills
  2. Financial Modeling
  3. Valuations
  4. Accounting
  5. Report Writing

Compensation

One of the major concerns of individuals willing to join this field is the salary figure they are offered. Here are designation-wise estimates of compensation one is supposed to receive:

  • Junior Analyst/Assistants have a base comp of $45,000 – $50,000 per year (average)
  • Associates have a base salary of $65,000 – $90,000 per year (average) depending on the experience. Additionally, they get a bonus of 50-100% of the base salary (in an average to good year)
  • Senior Analysts generally have a base compensation of $125,000 – $250,000. Their bonus may range from 2-5 times the base compensation.

Exit Opportunities

The opportunities are huge for sell-side research analysts. Career opportunities that individuals are exposed to once they confirm meeting the eligibility criteria have been explained in detail below:

Within Equity Research Firm

  • If you join as an associate, you can move up the ladder to become a Senior analyst assuming full responsibility for the sector coverage.
  • Later you can move further up to become Head of Research and Head of Equities.

Private Equity Analyst

  • Sell side analysts also move to the Private Equity domain working as Private Equity Analyst.
  • Instead of analyzing public companies, they analyze private companies from the point of view of investments.
  • They can move up the hierarchy to become a Private Equity Fund manager. Check out the list of Top Private Equity Firms.

Investment Banking Analysts

  • The movement of sell-side analysts to Investment banking is slightly tough but not impossible.
  • Sell side analysts are fully aware of financial research and modeling-related work.
  • They haven’t worked on transaction-related work like IPO filing documents, Pitch book, registration work, etc. If you are confused between Investment Banking and Equity Research, read this article – Investment Banking vs. Equity Research.

Buy Side Firms

  • Sell side analysts sometimes are also absorbed as buy side analysts (working for Mutual funds, etc.).
  • The buy side analysts assume the responsibility of fund managers over some time.

Corporate Finance

  • Sell-side analysts work a lot on financial analysis, analyzing company projects and their effect on the overall company’s financials. Hence, they get into typical Corporate finance roles of large corporations (take care of financial analysis, planning Projects, etc.)
  • Another unique role they get into is Investor relations. As sell-side analysts, they get equipped with the FAQs and how to deal with critical information and its sharing, etc. Due to this, they also become eligible for Investor Relations jobs.

Top Equity Research Firms

Institutional Investors ranking suggests that in 2014, the best research firm was Merril Lynch Bank of America, second place was taken by JPMorgan, and Morgan Stanley came third.

Apart from the top 3 above, there are other notable equity research firms (listed below)

Deutsche BankStandard Chartered Bank
Credit SuisseCornerstone Macro
UBSWolfe Research
BarclaysBNP Paribas Securities
CitiCIMB Securities
NomuraCowen and Co.
Goldman, Sachs & Co.Berenberg Bank
CLSA Asia-Pacific MarketsCitic Securities
Wells Fargo SecuritiesCRT Capital Group
VTB CapitalEmpirical Research Partners
Sberbank CIBJ. Safra Corretora
SantanderKeefe, Bruyette & Woods
ISI GroupKempen & Co.
Daiwa Capital MarketsOtkritie Capital
Jefferies & Co.Raymond James & Associates
Mizuho Securities GroupRenaissance Macro Research
SMBC Nikko SecuritiesSEB Enskilda
Macquarie SecuritiesABG Sundal Collier
HSBCAmherst Securities Group
Banco Português de InvestimentoAntique Stock Broking
Batlivala & Karani Securities IndiaAutonomous Research
BBVAHelvea
BGC PartnersIchiyoshi Research Institute
BMO Capital Markets Corp.ICICI Securities
BOCI ResearchING Financial Markets
Brasil PluralIntermonte
Commerzbank Corporates & MarketsJB Capital Markets
DavyKepler Capital Markets
EFG-HermesLarrainVial Corredora de Bolsa
Equita S.I.M.Lazard Capital Markets
Fidentiis EquitiesMainFirst Bank
GazprombankN+1 Equities
Goodbody StockbrokersOddo Securities
Guggenheim SecuritiesOkasan Securities Co.
Handelsbanken Capital MarketsOppenheimer & Co.
Samsung SecuritiesPetercam
StifelRabobank
Strategas Research PartnersRedburn Partners
UniCreditWashington Analysis
VontobelZelman & Associates

Equity Research vs Investment Banking

Equity research, being a part of investment banking firms, are supposed to have similar functions as investment banking division of the firms. However, the two terms differ widely, thereby making it important for individuals and entities to be aware of them. Listed below are the differences between the two to have a quick look at if one is willing to take assistance or start a career in the fields:

  • While investment banking has a series of positions in line for individuals to join, get promoted, and grow professionally, equity research offers only two but yet important designations to show their performance – one if of an associate and the other is of an analyst.
  • The hierarchy to be followed for investment banking is huge and rigid. This means, to get to the next position, one must learn and fulfill the expectations at the current position/designation.
  • When the hierarchical structure is organized and there is something to learn at every stage, performance betters and there are chances of having excellent professionals to carry out respective tasks. This is what the field of investment banking ensures. On the other hand, the equity research field has limited opportunities and hence individuals try to grab as much knowledge as possible in the positions they work in. Plus, they are expected to be and they are excellently skilled.

This article has been a guide to what is Equity Research. Here, we explain vs investment banking, how to do it, how to get into it, roles, examples, and hierarchy. You may also have a look at the following related articles for a better understanding:

Reader Interactions

Comments

  1. Anoop Kumar says

    Hi Sir, I am a CA and an aspiring investment banker. i have done your beginner course on IB and now this article. I learned a lot and now i am having a deep insight about investment banking. Will keep reading your post. Thanks

    • Dheeraj Vaidya says

      Thanks for your kind words!

  2. carlvin says

    i have gone through your work it is really educative ,i will now be going through it to learn more

  3. Basantkumar Sahu says

    Thanks Dheeraj!!

    It’s crisp and clear fora beginner like me with Societe generale.

    • Dheeraj Vaidya says

      thanks Basantkumar!

    • Janak shahi says

      Thank u very veru much sir ,I learn something new and I want further please

  4. Aqeel says

    Very nice article and provide deep insight about equity research.

    Thank you Dheeraj. I frequently read you published articles.

    • Dheeraj Vaidya says

      Thanks Aqeel. Glad you liked the articles.

  5. Allan Rodrigues says

    Thank you for the post. It was very useful and involved detailed content.

    • Dheeraj Vaidya says

      thanks Allan!

  6. Jinali says

    Hello Dheeraj,
    I am a Chartered Accountant and a CFA level 2 candidate. I have no work experience in equity research till now but i am very much interested and hence persunig CFA. I am a fresher. So what are the chances for a freseher to get into equity research as i am really trying hard to get into one? How to approach those firms?

    Thanks.
    Jinali

    • Dheeraj Vaidya says

      Hi Jinali, your chances are very bright already (given you are CA and CFA Level 2 candidate). You should be in a position to get an equity research job soon. Try updating your skills as well to include Financial Modeling, Valuations etc. This will help you get the shortlist for such positions.
      Good luck,
      Dheeraj

  7. Kevin says

    recommended post, thank u Dheeraj! im working as a junior analyst. Is it possible if i want to take the opportunity as a fund manager after this?

    • Dheeraj Vaidya says

      Hi Kevin, the first move would be to move into the buy side position as an analyst and later you can get promoted to fund manager roles.

  8. Priya kumari says

    Hii Dheeraj,

    I have just completed my MBA in finance,and eagerly planning to grow my career into analyst profile.Your article has really given me an overwiew of how it works,the whole analysis thing.Moreover,I would like to get more updates into the same.
    Thankyou

    Regards
    Priya
    Thankyou

    Priya

    • Dheeraj Vaidya says

      Thanks Priya, i am happy to see that you liked this equity research article.

  9. Gavin says

    Hello Dheeraj

    Please help me to understand the role of corporate access in the success of an equity analyst?

    • Dheeraj Vaidya says

      Hi Gavin, can you please let me know what you meant by Corporate Access here?

  10. Salem says

    Hi Dheeraj

    Thank you for this brilliant article. I feel well informed now.

    • Dheeraj Vaidya says

      thanks Salem!

  11. Given makaza says

    That was an informative piece dheeraj.. Thanks a lot

    • Dheeraj Vaidya says

      Thanks Given!

  12. Parth Pandit says

    Hi Dheeraj

    First of all thank you for such an informative post on a topic about which finding information is tough. Very well written.

    So I am currently pursuing my MBA in finance (2nd Year). Also I will be appearing for CFA level in Dec 2016.

    Would like to get your insights about how to get an opening in this field as a fresher. Also some tips on facing the CFA level 1 exam.

    • Dheeraj Vaidya says

      Hi Parth, I am glad you found this article valuable. As a fresher, CFA level 1 will help you alot in getting a shortlist.

      Here are some Tips on Facing CFA Level 1 exam

      Hope it helps,
      Dheeraj

      • Parth Pandit says

        Thank You Dheeraj
        Found the post really helpful especially the part on how to manage your time on different study resources.
        Hope you continue writing this blog.

        • Dheeraj Vaidya says

          thanks Parth for the appreciation. I am glad you like this blog :-)

  13. Sanchay Maity says

    An amazingly well written article. Such a wonderful change from the usual related articles filled with the technical jargon and confusing descriptions. Having said that there are some things that I would like to discuss with you offline. And I have sent you a mail to that effect. Could you please look at it and send me a response if at all you feel it necessary.

    Warm regards,

    • Dheeraj Vaidya says

      Hi Sanjay,

      Thanks. Unfortunately, I am unable to locate your email. Can you please resend me the same?

      thanks,
      Dheeraj

  14. Varun says

    Hi Dhiraj,
    Very good information..
    Let me know for entry in research part of capital market which is the best equity research training institute.

    • Dheeraj Vaidya says

      Hi Varun, you can take the equity research training from BSE institute.

      Thanks,
      Dheeraj

  15. Jinal says

    Informative post..thanx for d post..need to ask u from wer to start fr equity research analyst..I have interest in stock markets..but I want to make career in dese line..I have completed my CA CS recently.

    • Dheeraj Vaidya says

      Hi Jinal,

      You can start by converting your interest in stock markets to your passion. The starting point would be learn the nuts of bolts of research. To start with you can look at learning Financial Modeling, valuations, accounting and excel.
      you can also consider CFA level 1 exam for the same.

      Thanks,
      Dheeraj

  16. Gaurav says

    Dheeraj, What a wonderful resource you have developed! I am beginning to get to know to about Equity and your blog seems to be the first place to start!

    • Dheeraj Vaidya says

      sure Gaurav.

  17. EJ says

    Thank you Dheeraj! Very insightful guide for career transitioners like myself.

    • Dheeraj Vaidya says

      Thanks. It’s my pleasure :-)

  18. Amber says

    Hello Dheeraj,

    Which valuation method would you recommend? Which is more commonly used by equity analysts. The CFA curriculum places more emphasis on the relative valuation approach. This method is also more convenient for me as most of the inputs that go into the DCF calculation such as beta, equity risk premiums etc are not readily available for my country. Should I calculate these myself?

    Thanks

    • Dheeraj Vaidya says

      Hi Amber, I would prefer Relative valuation due to its ease. However, applying DCF (using the financial modeling forecasting along with FCFF approach) helps us understand company’s business in totality. I typically apply both to find the fair price.

      Also, please note that CFA curriculum hardly covers the DCF valuations using Financial Modeling. do have a look at this Financial Modeling using Excel Guide

  19. v Milind says

    Excellent blog!! Dheeraj, May I request you to kindly send the excel formats.

    Thanks Again for the through & detailed treatise of equity research.

    Regards;
    Milind

    • Dheeraj Vaidya says

      Hi Milind, did you receive the templates?

  20. Archana says

    Hi Dheeraj,

    Thank you for the article. Can you please provide the list of equity research firms based in India. please

    Thanks

  21. CA GAURAV M LUKKA says

    Hi Dheeraj,

    Nice Article.very useful for person like me who wants to start a career in Capital Market.

    Also if you can share some tactics how to start with equity research.

    Regards,
    CA Gaurav M Lukka

  22. NIDA says

    hello- I am unable to access your excel sheets, is something wrong?
    they are not being sent to my maibox

    • Dheeraj Vaidya says

      Hi,

      I have just resent you the excel sheets. Please check.

      Thanks,
      Dheeraj

      • Megha says

        Hi Dheeraj,

        My name is Megha completed my MBA in Finance fom Pune university in 2012. Graduated in Bsc-chemistry in 2007 , than worked sep 2012 to jan 2014 with barclays shared services in back office role and due to some problem left my job. Now got admission in post graduate program in securities market in National Institute of securities Market,and same time interested in equity research profile/ or as a trader, It will be great help if you can advice is it CFA worth for me ?

        • Dheeraj Vaidya says

          Hi Megha, if you have keen interest in equity research, then CFA will be fantastic addition to your resume.

  23. Afreen says

    Hi Dheeraj,

    I must say you are an exceptional blogger. I have ready 100s of articles and blog on this topic but you have just stricken the right cord . You got that flair of connecting with the readers and write in a way they best understand.This blog is perfect for everyone . Indeed I look forward for more such insightful
    work on investment banking.

    • Dheeraj Vaidya says

      Thanks Afreen :-)

  24. yogesh says

    It’s a great post and very useful. I am 25 yrs old and currently working as a Sbi po I am also planning to give CFA this year, I want to know how to prepare for same.please guide me.

    Thanks

  25. Renard Berry says

    Thanks for the great post. Provides clarity to a career decision I’m sorting through. Currently I’m a banker in the consumer line of business at a big box firm. I want to get into Equity Research however, my BA is in Philosophy and my only financial services designations are series 6/63 ( 2.5 yrs experience) Given these circumstances I understand that I’m at a disadvantage. To close the gap or give myself a legitimate shot in ER I’m considering the CFA or an MBA. I’ve done extensive research on both and it seems by most measures ( opportunity cost, monetary investment, time, preparation) that the CFA is the way to go.
    Just wanted to get your insight on my situation regarding best way to get into ER.
    Thanks in Advance
    -Renard

    • Dheeraj Vaidya says

      Thanks Renard. I think given your background and work experience, CFA seems like the best option.

      Cheers,
      Dheeraj

  26. Joy says

    Great post and very insightful!

    • Dheeraj Vaidya says

      thanks Joy!

  27. Shubham Aggarwal says

    Brother it was a really informative piece for people who want to pursue Eq. Research as a career. Thanks for the writeup.

    • Dheeraj Vaidya says

      Thanks Shubham :-)

  28. danny says

    Hi Dheeraj,

    I’m just starting out in following the markets and putting together some knowledge for potential interviews. I am a qualified accountant, cfa level 2 and I understand financial modelling and valuations.

    How would you go about choosing a sector and firms to follow so that you can pitch stocks comfortably at interviews. would i have to model a few companies and what sources would i use apart from published annual reports? thanks

    • Dheeraj Vaidya says

      Hi Danny, you have great qualifications at hand to crack interviews related to equity research. I think you should choose any sector that you have a good sense of. For example, retail, FMCG are easier sectors as we can walk into malls and stores and understand what’s going on. However, sectors like Oil & Gas, Banking, Pharma are difficult sectors to start as they require domain expertise.

      Other sources (apart from Annual report) could be conference calls, press releases, industry data, investor presentations etc.

      Good luck.

  29. Ken says

    Thank you for sharing your insights about equity research! I really learned a lot from your guide and this article is very useful for everyone interested in Equity research! Thanks again for your help!

    • Dheeraj Vaidya says

      Thanks Ken! Glad you found this article helfpul!

  30. Devi says

    very detailed information. thanks for sharing.

    • Dheeraj says

      Thanks Devi!

  31. Olesya says

    Thank you very much for your article. Equity Research Analyst is my dream job. Keep posting articles like this one please. It is very informative for newbies like me.

    • Dheeraj says

      Thanks Olesya. I am glad you liked the post.

  32. Siddharth says

    Great stuff Dheeraj! Thanks a lot

    • Dheeraj says

      thank you Siddharth. I am glad you liked the article.

      Best,
      Dheeraj

  33. Habtamu Debela says

    Dear Dheeraj,

    Your frank opinion is very interested. I am senior manager having exposure to financial services. Passionate about finance and bank for last 13 years. I intend to go for this course. It is very useful for my career and profession.
    Be free to contact on my email address if you have any information.

    With Best Regards,

    Habtamu Debela

    • Dheeraj says

      hello Habtamu,

      which course you are talking about – Equity Research or Investment Banking? given your background of 13 years in Banks, just wanted to understand from you, what is your long term objective?

      Thanks,
      Dheeraj

  34. PV Kanthi Rekha says

    Thank you soo much for posting such a valuable information Sir…

    • Dheeraj says

      Thank you very much :-)

  35. shrikant says

    Dear Dheeraj,

    Your frank opinion is solicited: I am ex banker having exposure to credits. Passionate about capital market for last 30 years and I am long term investor too. I intend to go for this course. Whether it will be useful ? In which capacity I will get opportunity to work? pl inform. I am having lot of my own
    information data-in economics/counting/balance sheet and ratio analysis.
    Pl free to contact on my email Id if necessary.
    Regards,
    shrikant

  36. vaibhav says

    how can i jion & start

    • Dheeraj Vaidya says

      Hi Vaibhav, if you want to join the free investment banking course, then click here.

  37. Nadine says

    This is a very interesting presentation. Thanks for sharing.

    • Dheeraj Vaidya says

      My Pleasure Nadine!

  38. Vivek Pandey says

    HI Dheeraj, Thanks for this article. Its highly informative. People like me who plan their career in equity research for them its very useful. Also could you please throw some light on buy side and sell side analyst. However I know that IB, Corporate Finance & Commercial banking falls in Sell side and Assets management, hedge fund and retail investing falls under buys side. Could you please explain this in short.

      • Vivek Pandey says

        Thank you Dheeraj :-)

  39. Kaustubh says

    Highly informative post.Enjoyed it.I have a query regarding this topic.Do Equity research analysts make use of technical analysis?

    • Dheeraj says

      Hi Kaustubh, thanks :-). You have a good question – Whether equity research analyst use technical analysis? I missed including this completely in my post. Equity Analyst primarily use fundamental analysis and NOT technical analysis for stock recommendation. The reason comes from the clients they server. Equity Research clients are mutual funds, insurance, pension funds etc. These clients mostly have long term time horizon. Using fundamental analysis, an equity analyst is able to guide the clients from long term investment point of view. However, the technical analysis is looking for trading opportunities that are short term in nature.
      Best,
      Dheeraj