Evaluate companies' financial standings to guide investment decisions.
What does an Equity Research Analyst do?
Smart buyers always do their homework. They consult “Consumer Reports,” for instance, when they’re buying a car, and they visit neighborhoods when they’re buying a house.
Like cars and houses, stocks definitely qualify as a major purchase — and good investors do plenty of homework before they buy. So much, in fact, that they need help doing it. If you’re an Equity Research Analyst, you’re their study-buddy.
While an Equity Trader makes the final transaction — for a financial institution, its clients or its Portfolio Managers — it’s your job as an Equity Research Analyst to help them decide what stocks to buy, sell and hold.
To do that, you spend your days researching companies to determine their financial health. You look at financial statements, for instance, and sales figures, as well as debt, key customers and legal liabilities. You also consider current market trends, company leadership and future growth plans, all of which act like a sort of crystal ball, allowing you to gaze into a company’s future in order to assess its prospects. If the prospects are good, you’ll recommend buying its stock; if the prospects are bad, you’ll recommend selling it.
Because your advice as an Equity Research Analyst is treasured and trusted, you’ve got to have superior research skills and a sharp intuition. You also must have excellent communication skills, however, as you’ll typically make your recommendations via written reports that summarize both your findings and your arguments.
Like most homework assignments, you’ll get some As, some Cs and maybe even some Fs; the higher your GPA, however, the more successful your career.