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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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Equity Research Careers: A Day in the Life, Advancement, Compensation, and Exit Opportunities

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So, you won equity research interviews by networking aggressively…

You presented 2-3 well-researched stock pitches and passed your interviews…

…and despite MiFID II and rumors of the industry’s demise, research teams still exist at banks.

What happens when you start your equity research career, how much will you work, and what exit options will you get?

All good questions – so we’ll answer all of those and more here:

What To Expect In An Equity Research Job

Similar to other public-markets roles, you might arrive at work a couple hours before the market opens. In New York, that means “around 8:00 AM.”

Once you arrive at your desk, you’ll spend some time catching up on emails from traders and salespeople, reading the news, and monitoring overnight market developments.

The rest of the day is a mix of keeping things up to date (e.g., financial models), researching companies, and finding new companies to initiate coverage on.

The best and most experienced Associates also interact with clients and set up management meetings between companies and buy-side firms, and these are the real moneymakers for equity research careers in the post-MiFID II environment.

Doing the work required to initiate coverage and building the initial model can take months, so teams need to balance that with other tasks, such as client summits and conferences.

Professionals in equity research careers are  best-known for insightful reports , but these reports do not necessarily take up the bulk of staff time.

That said, if the group is working on a detailed “thought piece” that reaches counter-consensus conclusions, that can consume a lot of time and effort. But it can also be worth it if it results in more viewership and client interactions.

Your time allocation during the day depends heavily on the industry you’re covering and how the Research Analyst (read: your boss) likes to run things.

In some teams, Associates spend 75% of their time modeling, but in others, it might be closer to 25% – and that percentage often changes over time.

Often, junior team members get tasked with modeling or grunt work, especially in larger teams, and senior members spend more time talking to investors and companies.

In equity research internships , you’ll assist the full-timers with data gathering, industry research, model updates, and more.

Equity Research Hours

If it’s a normal day, you might leave around 8:00 PM, which means ~12-hour workdays.

However, hours get significantly worse during earnings season , which happens once per quarter, and during industry conferences.

Unforeseen news events and developments, such as regulatory changes, M&A deals, earnings pre-announcements, or Amazon entering your space, can also make the hours worse.

Earnings season is busy because you have to update all your models and issue new reports with new estimates, and industry conferences are busy periods because you run around meeting people during the day and then do your actual work at night.

In both those periods, the 12-hour days can easily turn into 16-hour+ days, so the job will approach investment banking hours .

If you experience consistent mid-intensity stress levels in banking, equity research careers give you low-intensity stress most of the time, with occasional spikes to high stress.

As with any other public-markets roles, your schedule can be tough if your time zone doesn’t match the time zone of the major financial center in your region.

For example, if you’re on the West Coast of the U.S., you can look forward to waking up at 4 AM and arriving at the office by 5 AM each day.

Finally, the hours can get worse as you advance because Analysts have to travel and interact with clients while still assuming responsibility for published research.

Equity Research Careers: Example Reports and Other Deliverables

The published reports represent the “deliverables” that most people associate with equity research.

We linked to a few examples in Part 1 of this series on equity research recruiting :

• Morgan Stanley – Update on Lululemon Athletica
• Morgan Stanley – Initiating Coverage on Citizens Financial Group
• RBC – Initiating Coverage on Waddell & Reed Financial
• Lehman Brothers – REIT Sector Overview
• Lehman Brothers – Initiating Coverage on CBS Corp

You can divide these reports into three broad categories:

• Initial Opinion / Initiation of Coverage (IOC): This one is the first report ever published by the team on a specific company. It tends to be long (dozens of pages or more), and it has a lot of industry/market data, detailed rationale for the projections, information on competitors, the company’s valuation, and more.
• Industry Overview / Primer: This type of report also tends to be long (dozens of pages) because it covers an entire industry, such as U.S.-based pharmaceutical companies or European ground transportation companies (read: trucking). There will be sections on trends and key drivers/metrics, risk factors, legislation, and overall valuation levels, followed by shorter sections on specific companies.
• Company Note: This report is shorter (5-10 pages) and is issued when a company reports earnings, hosts an investor day, presents at a conference, or makes an announcement that impacts its strategy, such as an acquisition or the launch of a key product.

The “Initiation of Coverage” and “Industry Overview” reports consume a lot of resources, so teams must weigh the benefits carefully before deciding to invest the time and effort in creating them.

A typical research team covers around a dozen companies, so if your sector is “Large-Cap European Airlines,” your coverage list might include the Lufthansa Group, Ryanair, IAG (British Airways, Iberia, and others), Air France-KLM, EasyJet, Turkish Airlines, Aeroflot Group, Norwegian Air, Wizz Air, Pegasus, Alitalia, and TAP Air Portugal.

You focus on names that buy-side investors are interested in – in Europe, they’re paying you directly for the research, and in other regions, they’re making trades through your bank and generating commissions, and you encourage those trades with research.

Some boutique and middle-market firms focus on lesser-known names because they can add more value when they’re not team #37 covering the same company.

Your team might decide to initiate coverage on a new company when a firm you cover is acquired or gets de-listed, or because the company’s strategy or business model changes, or because your team gets additional headcount.

When that happens, you can expect to do a deep dive on that single company and its sub-industry for weeks or months until you have a detailed projection model and qualitative research to back up your assumptions.

The Equity Research Hierarchy and Promotions

In research, the most senior team member is the “Analyst,” and below that are the “ Research Associates .”

Each team usually has one Analyst and 2-3 Associates, with one Associate for every 7-10 names under coverage.

This system is a bit confusing because “Analyst” and “Associate” are just the titles used on published reports.

Internally, the hierarchy is still similar to the one in the investment banking career path , where you advance from Associate to VP to Senior VP/Director to MD.

The difference is that Analysts can be different levels: VP-level Analysts vs. MD-level Analysts, for example.

The total headcount across equity research at all banks in the U.S. is an order of magnitude smaller than the investment banking headcount: Hundreds of professionals rather than thousands.

That smaller industry size and the historically lower turnover mean that it’s often difficult to advance in equity research careers by staying at the same bank.

Sometimes you may get lucky and find an opportunity if your Analyst suddenly leaves, but you’re more likely to get promoted by joining a different bank.

To advance, you must build a reputation instead of burying yourself in Excel all day. No one cares how fancy your model is – they care how good your insights are.

Many Associates struggle to move up because they don’t take the time to get to know management teams and institutional investors.

If you don’t perform well enough to advance, you won’t necessarily be fired dramatically ; research professionals are cheaper than bankers, and there’s no fixed 2-year or 3-year program.

That said, it is not unheard of for entire research verticals to be eliminated during cost-cutting season.

At the junior level, people tend to stick around for 2-4 years before moving to another firm or leaving their equity research careers behind.

Equity Research Salary and Bonus Levels

As of 2018, Associates in major financial centers tend to earn between $125K and $200K USD in total compensation, with about 75% of that from their base salaries.

Post-MBA and graduate-level hires earn in the middle-to-high-end of that range, and possibly slightly above it.

As with investment banking compensation , you’ll probably earn below this range in London for a variety of reasons (GBP/USD, Brexit, MiFID II, pay is almost always lower in Europe, etc.).

VP-level professionals earn between $200K and $300K, again with 75%+ from their base salaries.

However, at smaller banks, VPs could earn below this range – something closer to the Associate compensation range is possible at the lower end.

Directors might earn between $300K and $600K, with 50-75%+ of that in base salary. At this level, the year-end bonus starts to make a huge impact on total compensation.

Finally, MDs could earn between $500K and $1 million, with base salaries in the $250K – $600K range.

Back in the dot-com boom of the late 1990s, some Analysts earned $10 million+, but these days, it’s a great outcome if an MD-level Analyst clears $1 million.

To earn in the low millions (say, $1.0 – $2.5 million), you’d likely have to be one of the top few Institutional Investor-ranked Analysts.

With MiFID II, these numbers will almost certainly fall – especially in Europe.

Equity research careers have always paid less than ones in investment banking, and that difference is likely to widen over time.

Historically, bonuses were based on 1) Analyst rankings such as the Institutional Investor Poll (II) Greenwich Poll; 2) the performance of Buy/Hold/Sell calls; and 3) revenue indirectly generated via trading commissions and investment banking fees (e.g. from companies going public or public companies issuing follow-on offerings through the bank).

With MiFID II, the basis of compensation will presumably shift to the amounts buy-side firms are spending directly on research.

The research reports themselves are not necessarily that expensive, but interactions and management meetings, non-deal roadshows, and conferences add up, and in some cases, buy-side firms end up spending more and consuming less.

Buy-side firms spend this money because many of their professionals cover breadth rather than depth, and sell-side Analysts might know specific companies in more detail.

Research compensation is likely to become more lopsided, with the top-ranked groups garnering the bulk of the fees and lower-ranked firms fighting over the scraps.

Equity Research Exit Opportunities

The bad news is that it is almost impossible to break into private equity directly from equity research.

Yes, a few people have done it over the years, but it’s far easier to transfer into investment banking first if you want to go that route.

You do not work on mergers, acquisitions, or leveraged buyouts in equity research, which makes your skill set not-so-useful for PE roles.

It’s far more common to move to hedge funds or asset management firms since there’s a direct skill set overlap – you analyze public securities and make investment recommendations in each one.

Within that category, long/short equity funds are the most natural fit for equity research professionals, while global macro funds are the worst fit because you work on the “micro” level in most equity research groups.

Other types, such as merger arbitrage and event-driven funds, could be a good fit depending on the sector you covered and the importance of deals, news, and events in that sector.

For more about this topic, please see our articles on hedge fund careers and private equity vs hedge funds .

Another option is to start your own fund eventually, which we cover in our “ How to Start a Hedge Fund ” article – but the key word there is “eventually” since you won’t be able to do this directly out of an ER role.

You could also move into the corporate finance career path at normal companies, investor relations , or potentially even corporate development – your industry expertise may compensate for less deal knowledge there.

Some professionals also leave their equity research careers and move into corporate strategy because their coverage and analysis of companies is typically higher-level, which fits right in with strategy.

In those roles, you might also be in charge of competitive intelligence, monitoring your firm’s peer group, and publishing internal reports.

Some research professionals also decide to attend business school, and if they do, they’re viewed similarly to other high-performing financial professionals .

One challenge is that it can be harder to get solid recommendations in equity research because team sizes are smaller, and the Analyst calls all the shots.

So, if your Analyst relationship isn’t great, you may have to request recommendations from other groups or people outside the firm.

It’s not uncommon to ask another Associate, a salesperson, or a trader for a recommendation for this reason.

Are Equity Research Careers Still Worthwhile?

Going back to that question we posed in Part 1 , our most frequent query about equity research careers goes something like this:

“Everyone says the industry is dying! Should I still go into it? Won’t the new regulations, falling commissions, and passive investing destroy everything?”

And the answer remains the same: The industry won’t go away overnight, but it is less appealing than it once was.

However, that matters a lot more for Senior Analysts with 10+ years of experience whose business models are being pulled out from under them.

If you’re at the undergrad or MBA level, you could still make a solid case for working in equity research for a few years and then using the skill set to move into another industry.

You’ll do more interesting work than in investment banking.

You’ll have more of a life, with saner, more predictable hours and occasional stressful periods.

You’ll build a solid network of buy-side professionals and company managers.

And you might even be able to sneak in through the side door – like an undervalued stock.

• Equity Research Recruiting – Part 1
• Equity Research Careers – Part 2

You might be interested in:

• Biotech Equity Research: The Best Escape Plan from Medicine or Academia?
• The Equity Research Analyst Career Path: The Best Escape from a Ph.D. Program, or a Pathway into the Abyss?
• Fixed Income Research: The Overlooked Younger Brother of Equity Research?

Numi Advisory  has provided career coaching, mock interviews, and resume reviews to over 600 clients seeking careers in equity research, private equity, investment management, and hedge funds. With extensive firsthand experience in these fields, Numi offers unparalleled insights on how to ace your interviews and excel on the job.

Numi customizes solutions to each client’s unique background and career aspirations and helps them find the path of least resistance toward securing their dream careers. He has helped place over 150 candidates in leading buy-side and sell-side jobs. For more information on career services and client testimonials, please contact  numi.advisory@gmail. com , or  visit Numi’s LinkedIn page .

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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29 thoughts on “ Equity Research Careers: A Day in the Life, Advancement, Compensation, and Exit Opportunities ”

Hi Brian, I’ve worked at equity research for 6+ years and now trying to figure out which division I should go to at the corporate side. Which function/role do you recommend if I have all the options – corporate strategy / corporate finance / corporate development / investor relations / treasury? I am skewing more towards investor relations but my end game is to become CFO or move back into finance (asset management), so I do want to do more of analysis and internal role rather than communication.. Would love to hear your thoughts on this, thanks.

You could do any of those, but if your goal is to become a CFO, the corporate finance option is the most relevant. Strategy and corp dev are maybe “more interesting” but do not lead to CFO roles in most cases. And Treasury is usually a part of corporate finance. Investor relations is more relevant if you want to do fundraising or related roles.

I am a sophomore in college and want to break into Venture Capital one day. I am certainly a hard worker, but I feel like the lifestyle of an investment banker takes hard work to an extreme. I am a health conscious person and I want to prioritize that, which I feel like I can not do in IB. If I were to start out in equity research, I think I would develop strong valuation skills. However, I know I would lack the deal experience to pivot into PE or VC. Could I do equity research, then management consulting, then pivot into PE or VC? Or would you switch those two around? Do you have other ideas? For me, I don’t necessarily have a short timeline where I want/need to work in PE or VC in 2-3 years. I know that it might take me longer without the IB background, and I am perfectly fine with that. With that said, do you have any advice?

You could do that, but I’m not sure why you need ER first if you want to do consulting and then PE/VC. It seems like you could just do consulting first and get into one of those (VC is much more likely than PE, at least if you’re in the US).

I would recommend looking at the VC career path article on this site because there are many different routes into the industry, and you don’t necessarily need IB or consulting experience first. It helps, but people can also get there via startups, product management sales/biz dev, etc.

Hi, May I ask what are the current comp ranges like at the different levels for BBs? How significantly different is it from IB? How are the exit opps too to Hedge Funds? Do headhunters contact ER analysts as well?

It’s a significant discount to IB. Compensation doesn’t really change much in the span of 2-3 years if that is your question, so the ranges here still apply. Most HF recruiting is off-cycle, meaning you need to do the legwork and outreach yourself rather than relying on headhunters. Headhunters may contacts some ER professionals for certain roles, but it’s not the same process as the IB –> PE recruitment pipeline.

Hey Brian, I’m a bit confused as to the difference between an equity research analyst and a desk analyst in the s&t. Are they mutually exclusive or are they progression within the ER department. This doubt comes from the article on the distressed desk analyst.

There is some overlap between certain desks, but S&T is very different in most cases because it’s responsible for executing trades and selling/distributing products to clients. There’s overlap in the sense that you may do “research” in both ER and S&T, but the purpose is quite different because in ER, it used to be to encourage S&T clients to trade, and now it’s produced so that banks can charge clients directly for the research. Distressed debt is probably the area where S&T is closest to ER, but even there, it’s different because you do not trade or sell anything in ER. And there is no distressed debt ER group – maybe there’s a credit or fixed income research group that covers distressed debt.

Will a msf from a non target school help you get into equity research? Are they less lenient than investment banking when it comes to the school that you attend? Or do you have to go to a target school for equity research?

ER does almost no on-campus / on-cycle recruiting, so a better school helps, but not as directly as it does for groups that come to campus to recruit.

Do you believe that a msf will help to help me get into equity research

Impossible to say because I don’t know your university, GPA, previous work experience, networking, etc.

Very informative article, thanks. I am interested in making a career move and would greatly appreciate some advice. I have 7 years experience in financial services audit with a big 4 and am at the manager level. I’ve worked across a spectrum of industries in multiple cities – Dublin, New York and Chicago. Is it realistic for me to able to find an ER role with my background? If possible, will it be an uphill battle? Thanks

Potentially, yes, but it really depends on what your Big 4 experience looks like. If you’ve just done audit it will be tough because you need valuation/investing experience to get into ER in most cases (or deep knowledge of a highly technical industry such as biotech or semiconductors).

How do you view the ER/AM/HF career now in light of COVID19 (along with all the previous ongoing headwinds)? Would starting off in IB make more sense?

It has become an even worse career path, so yes, IB is still a safer bet.

I have completed foreign equivalent of CPA and all 3 levels of CFA. I have about 5 years of professional experience in tax consulting with Big4 in India and about 2 years of experience in a Financial Controller in UBS in USA. I also have 3.5 GPA.

I am facing huge barriers to break into investment banking / equity research / private equity / hedge funds on Wall Street even in entry level roles due to bias and prejudice related to my professional background and education.

I am not very clear as to which exact path ( IB/PE/ER/HF/AM) I wana take but my goal is to work on wall street, maximize compensation and do reasonably interesting / intellectually stimulating work.

Given my background, which of the above career paths would be relatively easier to crack / better suited to my career goals? I am also open to doing full time MBA from a top school to be able to make this transition to wall street coveted roles.

How should I go about strategizing my career and what all do I need to absolutely do so that I have a reasonably good shot at achieving my goals ?

Appreciate your guidance.

All of those paths are going to be difficult if you have 7+ years of work experience in tax/financial controller roles because the skill sets don’t have much in common with IB/PE/ER/HF/AM.

At this point, you will probably have to complete a top MBA to make this transition because the window closes once you’re more than 2-3 years out of undergrad.

But I think you should start by figuring out what you want to do because all those careers are very different… start by reading our coverage of each one on this site.

Hi Brian, I have completed CPA as well as CFA recently and will soon be registered with FINRA. I have around 4 years of experience in consulting in the big4 in india and about 1.5 years of experience in financial controlling in UBS in usa. I want to get into an AM/HF investing role for the long term with a goal of maximizing compensation. What is my best/quickest bet to make this happen ? I was considering interviewing for an equity research analyst position in BB / buy side research analyst position in BB and then 1-2 years down the line make the switch. Whats your advice?

I may get an offer soon for a research analyst position in the Chief Investment Office of UBS – should i take it up? Will i be able to make the switch 1-2 years down the line?

Yes, I think you could probably do that. A Research Analyst role would set you up for the others you mentioned. I think the main point is that you need to move quickly no matter what you do because you’re getting to the point where you might have “too much experience” to move into research (though it’s still more flexible than banking). So, if you get this Research Analyst offer, you should take it. If not, maybe network around and interview for ER roles at the large banks and then make the switch after that. I don’t think you could move directly from financial controlling to AM/HF investing.

Thanks for the advice.. very reassuring to know you agree with my thoughts. Wanted to clarify 1 thing: if i take up the research analyst role in the CIO of UBS, would i still NEED to move into an ER / buyside analyst role at a large bank before i can switch into an AM/ HF investing role ? If thats the case, should i target moving directly into these roles – if im able to pull it off quickly ?

No, I don’t think you would need to move into another role just to switch into AM / HF investing from there.

Hey Brian – could you elaborate on what you mean by too much experience? Is it more difficult to start a career in ER/IB/HF/AM as one gets older (I’m 30).

Yes, it gets more difficult. They’re not going to hire someone with 8 years of full-time experience for an entry-level IB role. Other fields are a bit more flexible, but you still generally need to move quickly because it becomes more difficult to switch over time.

Very informative article. Hi Brian, I am a current Masters of Finance student in Europe and I’ve been trying to secure a job in IBD (M&A in particular) with no success so far. However, I’ve recently won an offer for an Intern in sell-side equity research in a small bank. I have prior big 4 experience, but no banking experience. Do you think this summer internship, would increase my chances of winning an IBD role afterwards?

Yes, an ER internship, even at a small bank, would definitely help with IB roles in the future.

Thanks a lot for taking the time to reply, really appreciate it!

Great article! I’m working in ER atm and this is bang on. Question however. If I am looking to make the switch over to IB, are my chances any good with a lateral move or would it make sense to go back for my MFin or MBA?

Thanks. You should definitely try a lateral move before considering another degree. Another degree should be your “Plan Z” option in this case if absolutely nothing else works out.

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Top up-and-coming equity research analysts share their secrets to a launching a successful sell-side career

• Insider selected 19 research analysts 35 and under for its 2021 rising-stars list .
• We asked the up-and-comers to give us their best career advice for those just starting out.
• Here are some of the top insights, straight from the wunderkinds themselves.

Wall Street's top equity-research analysts do much more than keep a pulse on the stock market and company-specific news to give clients an edge.

The bold calls on whether to buy, sell, or hold a certain stock come from professionals with a natural curiosity for the sectors they cover, an insatiable appetite to learn, and the ability to disseminate that information in a compelling way to their clients.

At least that's what we learned from some of the top young sell-side equity-research analysts featured on Insider's rising-stars list.

We spoke with all 19 finalists about what advice they'd give aspiring equity research analysts and what's helped them find success at a relatively young age.

Take a look at some of the lessons and insights they've learned along the way.

Read our full list of the rising stars of equity research

Treat the job as a lifestyle jpmorgan.

"Equity research is all about being on top of things. The earlier you learn that in your role you have to prioritize, while still keeping an eye on the macro and what's going on in other sectors, that helps you become more well-rounded.

"You have to be really passionate about the role, which is not very easy. It's kind of like a lifestyle. You have to be passionate about the job, and it's hard to do it really well if you aren't treating it like a lifestyle."

- Rajat Gupta, JPMorgan

Bank of America Test and retest your assumptions

"Never allow yourself to get bored, and I think that one is a little bit straightforward in that being a research analyst requires you to be intellectually curious. But the way I approach my job is there's always another angle to look at things. You can continually test and retest your assumptions.

"The second thing, and this has been really beneficial in my career, is don't be afraid to overask. And I say that from an operational perspective, whether it's asking questions to corporate or asking questions to your boss or your team members to better understand your sector or stocks or maybe just the market in general. And then you can extend that into the career side of things, which is asking for more responsibility, more coverage.

"The third one that I would say is having a next month, next year, and next three- to five-year plan. And that is something that I am very disciplined on in terms of being anticipatory and forward-thinking about how I want my career to play out." 

- Aileen Smith, Bank of America

Robert Majek Learn to program

"Don't be afraid to specialize. Firms are shifting from wanting general to more specialized analysts, so pick a sector and go deep.

"I recommend researchers also learn to program, specifically in Python. Gathering alternate data is becoming a key differentiator, and you'll stand out if you know Python and can run a script to scrape the web and collect information. I've talked to a few other colleagues of mine who cover consumer, retail, and other sectors, and they've all said that when hiring new associates, that's a skill that will make your résumé pop off a bit."

- Robert Majek, Raymond James

It's OK to be wrong sometimes

"Don't be afraid to be wrong. What I always tell undergrad students who are looking to come into the industry, since it's always a buy-side versus sell-side conversation with a lot of them, is that on the buy side, you can be wrong and you lose a lot of money. But on the sell side, when you're wrong, thousands of people know you're wrong.

"So you have to be humble. Sometimes, you have to admit when you're wrong. But if you don't take risks, and you don't take chances, you're ultimately not going to get recognized. You don't make a name for yourself by being in line with the consensus on everything. 

"For those who are just starting out, I would say: Always, always, ask for more. Be intellectually curious, but make sure you're really pushing yourself early on."

- Lauren Schenk, Morgan Stanley

Find your audience

"Focus on client service. The way I think about equity research is that it falls into two large buckets: research-creation and then dissemination and distribution. On the reading side, you have to understand what you're covering. But for dissemination, it's a lot of phone calls, emails, and going out on the road. And if you do that distribution correctly, you get feedback that helps your research.

"It's a nice, virtuous cycle that has a client-service component, and that sets apart the best analysts. You can't sit in an ivory tower and just think of the most incredible analyses — if you can't find and create your audience, no one will be able to appreciate the analyses you've done."

- Judah Sokel, JPMorgan

Find your niche

"Just because it's not what's been done doesn't mean it's not what you should do. If you look at traditional leisure coverage, it doesn't necessarily look so much like my coverage, or I should say my coverage doesn't really look so much like traditional leisure coverage.

"When I think about how I first made the push to get some kind of lead coverage, I was pushing to cover something that was not a flagship type of product per se. Look for areas where you can have an impact, even if you think that that particular area isn't so crucial to people, because you can find a way of standing out just because no one else is really looking there."

- Paul Golding, Macquarie

Don't hesitate to ask questions

"I think sometimes, particularly as a young analyst, we get a little hesitant around asking what may seem like silly questions, but at the end of the day, it's less silly and maybe something that isn't even broadly considered by other analysts.

"Even as I've progressed, just staying curious and continuing to ask questions because you never know, there might be a bit more of an unexpected answer than you'd expect. And so just never being afraid to ask what may seem seemingly obvious."

- Emily Chieng, Goldman Sachs

Network, network, network

"Have as many conversations with people in this industry as you can. And that doesn't necessarily mean intern at as many places as possible, but just have as many conversations as you can. I think if I had done that, I would have found my own route to equity research a little bit faster and would have been able to enjoy being in this role a lot longer.

"There's so many jobs in finance that I wasn't even aware of when I was a student that I'd just encourage that vast exploration. Demonstrating that intellectual curiosity is what really shines in equity research."

- Kristen Owen, Oppenheimer

Take ownership of your work

"I listen to feedback from my clients on the calls I'm making, and pushback, and I try to apply a healthy dose of self-criticism to what I'm doing to make sure I'm being as objective as possible.

"In terms of rising within a team, I think it's simple things that we all know: taking ownership over the work you're doing. Early on in your career, you're not going to really be the vocal leader. That's probably something that at more senior positions is going to be — so it's arriving early at the office, being the last to leave those. Those simple things, I think, are important when asking for more responsibility."

Related stories

- Stephen Glagola, Cowen

Always be willing to learn  

"Early on, there were times when I was a new associate, and I was frustrated, tired, and didn't get it and just wanted to give up, but I kept pushing through, kept learning, and kept trying to gain mastery of the sector and the industry. And it was through that tenacity that I was able to get to where I am today in my career.

"With that said, it's also really important, as someone who doesn't have a science background but covers biotech stocks, to know what I do not know and know when I need to go find an answer. I think you gain the most credibility from your clients and companies if you say 'I don't know the answer, but I know I can find the answer for you' versus making something up that is not correct. That is how you build credibility.

"In this business, your name and your reputation are everything. That is the most valuable thing, so you want to be credible with all the constituents that you interact with."

- Evan Seigerman, Credit Suisse

It's all about attention to detail

"Having an attention to detail in everything you do generally pays dividends, and I think people recognize the quality of work. That's one of the ways that I've conducted myself throughout my career: I've never done anything quick and easy. I've always been extremely thorough about every task that I've performed.  

"You have to be willing and ready to take advantage of opportunities that are presented to you, but it's the hard work that you've done before that, the attention to detail that you've had, and the level of work you've completed before that's going to allow you to have a chance to take those opportunities."

- Kyle Voigt, Keefe, Bruyette & Woods

Pick a sector you have an interest in

"If you're interested in equity research, you have to join a sector you care to learn about. … I really enjoy researching software, and I think that drive to understand the companies and wanting to understand the technology is super important.

"Early on, when you're just starting in equity research, I found I added a lot of value in being super detail-oriented and being proactive in digging for answers to questions I could tell clients had."

- Taylor McGinnis, UBS

Know your stocks 

"If you're thinking about whether equity research could be a good fit for you, ask yourself how much do you like school and if you really like reading and writing, and going to classes.

"When I talk to someone for an informational interview or even a real job interview, if they have a couple of stocks or a couple of companies that they've really followed, and that they're interested in and passionate about, I think that sends a message.

"If you're following some companies in your free time already, it strikes people that you're really passionate because I think the equity-research profession is a little bit of a hobbyist profession. The people who do this stuff love it. They follow markets and stocks and read all the time, so if you can kind of convey that in your own approach, and your attitude aligns with that, I think that's a strong message."

- Paul Matteis, Stifel 

Keep an open mind

"My pivot from consumer into TMT is something that I still describe today as one of my most fortunate failures, or one of my favorite failures. I think it's important for people to keep an open mind, especially early in their career.

"One thing our head of Americas equity research always says is that we all have to develop our own brands, and we all have to decide what we're doing that's different from everyone else and what we're going to be the best at."

- Michael Ng, Goldman Sachs

Be humble and respectful

"The most important thing to have is humility and not be afraid to learn from your mistakes.

"Don't be afraid to speak up if you have something insightful to say, but at the same time, when you're breaking into the industry, respect the folks you're working for and try to see if there are things you can learn from them and their processes.

"But don't be afraid to add your own spin to things and develop your brand, which people are going to come to know you for."

- Tyler Radke, Citi

Communicate and collaborate

"To be good at this job, you need to be really curious because it's a lot of hours that you're going to dig into a topic or theme.

"It's very important to have good communication skills. Work on that to build relationships with investors but also with your own team. … Make sure you're collaborating with other teams. I think that's what really elevates you within your department."

- Aga Zmigrodzka, UBS  

Stay curious 

"Whether you are on the sell side or buy side, probably the most important thing is to have no loose ends around your assumptions, so having every single assumption backed up by a rational thought process. Curiosity and a passion for investing will make it feel such that having that mentality of no loose ends is not a hassle but something that you want to do.

"If you have a passion for the product and a passion for investing, and you also let your curiosity blossom, then it will make you a better stock picker because you want to get the answer right. When you're genuinely curious, you are going to dig a little bit deeper versus just trying to check the box."

- Ben Chaiken, Credit Suisse 

Learn something every day

"I think it's important to be constantly learning. There's a lot of information out there in the biotech space, so constantly being aware of it means you can never learn enough. I've been at this job for five years, and I feel like I'm still learning every day, so that's how I set the benchmark for my career. I want to be in a position where I can constantly be learning, and I think that's really something that the equity-research career has afforded me.

"Find your niche, look at the market, and see how you can be differentiated, and really try to focus on that because finding where you are best and how that overlaps with an unmet need in the investment community is perfect."

- Joe Thome, Cowen

Keep your options open when you start out

"No matter what firm you're going to, you want to try to cover something you genuinely have some interest in.

"You should definitely consider multiple paths in the beginning because not everyone finds their calling initially. And I certainly didn't. I think it's always important to kind of keep that open mind."

- Edison Yu, Deutsche Bank

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How to get an entry level job in equity research

Equity researchers, or analysts, are often the talking heads of the investment banks. When bank offers an opinion on a particular company or stock in the press, it’s usually the specialist analyst covering that sector who gives a view.

Researchers spend their time focusing on large-cap companies, generating investment ideas for clients on the ‘buy-side’ (namely big fund managers). While they spend time producing reports, poring through company financials and giving occasional views to the media, much of their job is spent doing more fundamental research that will set them apart from their competitors.

They’ll speak to company CEOs, CFOs and investors to get an idea of both sector sentiment and the specific prospects of a company, as well as creating complex financial models to predict the earning potential of particular firms.

The idea is to encourage big investors to then trade particular stocks through the sales and trading teams of the bank the analyst works for. Most cover large companies, which create the greatest investor appetite, but smaller investment banks also cover attractive mid-sized firms. There can be up to 25 analysts covering the same stock, so focusing on more niche companies can give smaller banks an edge.

Jobs and career paths in equity research

Equity research is much less hierarchical than other areas of investment banking; teams are small and it’s more about the ideas you generate (and their performance) than your job title.

Researchers focus on industry sectors, such as technology or financials, and then a specialism within that – say, hardware or banks – and each sector team will cover around 15 companies. Initially, you will be given the role of associate, of which there are two-three on any team. They cover a few stocks within the sector team, and do a lot of financial modelling, but it’s the senior analysts – namely those with their names on the report –who get the credit.

Then, it’s a case of gaining the respect of the industry and your peers by making both correct and original calls. Top-ranked equity research teams can bring in a lot of business to banks’ trading desks, and analysts are more likely to be headhunted by another investment bank, or a hedge fund or fund manager.

One of the most common exit opportunities for equity researchers in investment banking is to move to the buy-side. Primarily, this has involved taking an analyst role in a hedge fund, where you would make investment recommendations for the fund's in-house portfolio management teams. In hedge funds, analysts are often called 'idea generators'. Increasingly, though, equity researchers have been making the move into institutional fund managers, which again involves making recommendations to their in-house investment teams. Equity research hasn't been the most stable career within investment banks in recent years, and the buy-side can offer greater job security.

Skills investment banks want from equity researchers

Banks expect research candidates to come armed with the same mathematical prowess as those entering other front office roles, but you need more. “A good research analyst combines strong quantitative and analytical acumen with an ability to see and tell the ‘story’ reflected in a company’s numbers,” said Lisa Thomas, managing director co-head of Americas Equity Research, Nomura. “Their ability to “get into the weeds” is highly valued by clients, whether it is applied to a company’s financial statements, industry data and trends or is focused on some other element of company performance or industry drivers.”

Not only must you be able to assimilate complex data points and translate them into clear themes for investors, you need to have great communication skills to liaise with various parties (investor relations professionals and portfolio managers, for instance) in order to develop “abroad mosaic view of the company’s prospects for future performance,” said Thomas.

“We require our analyst teams to have independent, commercial and actionable ideas. This needs to be combined with robust analysis, conviction and integrity," added Xavier Gunner, deputy head of equity research, EMEA, HSBC.

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How to get an entry level job in equity capital markets

How to get an entry level job in M&A

What utter rubbish. " it's more about the ideas you generate (and their performance) than your job title." - There is an inverse correlation between how good recommendations are and how much money you make in equity research. Equity research has become about post event rationalisation, for those trying to justify underperformance and why they got stuff wrong.

A very successful MD at a large global bank once explained to me. "you have to make things needlessly complicated for professional investors. If you make it simple, they then realise they don't need an analyst to understand the investment case. And then they will think for themselves, and a fund manager who can think independently is a disaster for the sell side because they won't pay us to do their thinking for them."

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Equity Research Overview

A systematic process of analyzing the market position of a company to examine investment opportunities.

What Is Equity Research?

• Organization Of Equity Research Divisions
• Equity Research Report
• Equity Research Vs. Investment Banking
• Day In The Life Of An Equity Research Analyst
• Who Funds Equity Research?

Equity research can be defined as a systematic process of analyzing the market position of a company to examine investment opportunities.

Equity research (ER) professionals are in charge of analyzing, recommending, and reporting on investment opportunities that their clients, investment banks, or institutions may be interested in pursuing. 

Its main goal is to supply investors with precise financial analysis and recommendations on whether they should buy, hold, or sell a specific security. 

Analysis of a company’s financials using ratio analyses and forecasting its financials in Excel is a key part of the research process. 

It is often used to assist a bank’s investment banking and sales and trading clients by offering up-to-date, reliable information and analysis. 

Equity researchers analyze stocks in order to assist portfolio managers in making knowledgeable investment decisions. They utilize problem-solving skills, data analysis, and other tools to determine and forecast a particular security’s prospects. 

In order to assess a security’s behavioral outlook, equity researchers must quantitatively evaluate a stock’s statistical data relative to recent activity in the market. 

Other tasks of equity researchers include:

• Creating investment models and screening tools that recognize trading strategies that assist in the management of  portfolio risk .     
• Finding patterns in price changes in the current market and utilizing this data to develop algorithms that find profitable stock investment opportunities. 
• Comprehending peculiar differences among international markets so that they can analyze and compare domestic and foreign stocks. 

Key Takeaways

• Equity research is a fundamental component of the financial industry that involves analyzing and providing insights into publicly traded companies and their stocks.
• Equity researchers, often employed by investment banks, brokerage firms, or independent research firms, conduct in-depth analysis of companies to help investors make informed decisions about buying, holding, or selling stocks.
• Equity researchers analyze various aspects of publicly traded companies, including their financial performance, business operations, industry trends, competitive positioning, and growth prospects.
• Equity researchers study industry dynamics, market trends, regulatory developments, and competitive landscape to assess the potential risks and opportunities facing companies within specific sectors.

Organization of equity research divisions

If you are looking to pursue a career in ER, it is essential that you understand that it has a relatively flat organizational structure. On the other hand, investment banking is quite hierarchical. ER typically only has two main positions: Associate and Analyst. 

Equity is different from most other areas of corporate finance because the Analyst position is more senior than the Associate position. The Analyst usually has chief responsibility for covering a group of companies, and a few associates work for them. 

Typically, analysts are divided into various industry sectors to cover similar companies within a given industry. ER analysts need to have extensive specialized knowledge about the sector they work in, so most stay in one industry.

Some sectors of ER include healthcare, internet, technology, mining, telecommunications, consumer discretionary, and consumer staples. 

Usually, one team of analysts and associates covers 5 to 15 companies. Some factors that determine the number of companies a team covers include its seniority, company sizes, and industry. 

Producing reports is the main job of equity researchers. These reports may be “flash reports,” which are quick updates, or “initiating coverage” reports that are more in-depth. ER associates and analysts must be constantly publishing these reports. 

Additionally, equity researchers must be able to build financial models .

A typical ER firm also has a Head of Research who is in charge of managing the analyst team by leading, coaching, and guiding them to ensure that all goals are reached. 

The role of the Head of Research is to supervise the research reports and publications by editing and checking the accuracy of analysis and recommendations made to brokers. 

As a manager, the Head of Research is also responsible for hiring, paying, and training staff. 

Equity research report

An ER analyst arranges this document, which provides investors with insight into specific securities. In the report, analysts offer recommendations for buying or selling the security, along with its valuation and risks.

Components of an equity research report include:

1. Industry research 

This section of the report details the trends and competition in a specific industry. The industry's components to consider include the current social, political, economic, and technological environment. 

2. Overview of management and commentary 

It is essential that the report considers the nature and quality of the target’s management team. Equity researchers have direct access to management, so they have the ability to contribute value to the report. 

While individual investors do not have this ability, equity researchers can directly contact management and ask them questions about the business. They can then pass on that information to investors. 

3. Historical financial findings 

One of the fundamental tasks of ER is assessing financial results and comparing them to the guidance provided or to the analyst's expectations. 

A stock’s performance is primarily derived from reality vs. expectations. Analysts must be able to determine whether historical results were below or above market expectations. 

4. Forecasting 

Equity researchers must also be skilled in financial modeling and in producing both top-down and bottom-up forecasting. 

The top-down forecasting method first examines aspects of the industry, like its size, growth, and pricing. Then, the researcher must assess a company’s market share and eventually work down to revenue. 

The bottom-up method begins with the fundamental producers of revenue (e.g. units sold and the number of customers) and then works up to forecast revenue. 

5. Valuation 

Equity research analysts may be tasked with building financial models, such as 3-statement models and DCF models. These models are built from assumptions from the forecast and add more assumptions (e.g. valuation multiples or discount rates). 

6. Recommendations 

In this section of the report, the analyst will present a target price that advises the investors about the stock’s price in a year’s time. They also recommend whether or not the investor should buy, hold, or sell. 

The analyst will compare the security's fair price with the current market price . If the fair price is below the current market price, the security is considered overvalued , and the recommendation is to sell. 

The opposite is true if the fair price is above the current market price: the security is considered undervalued, and the recommendation is to buy. 

Equity research vs. investment banking

Investment banking has often been viewed as the top banking role for the best talent. However, many talented workers have been shifting toward pursuing management consulting , technology, or entrepreneurship because of the arduous hours required of investment bankers. 

Equity research is another great role for prospects who want to work in the financial services industry. While it is sometimes considered less attractive with lower compensation in comparison to investment banking, reality differs from this commonly-held perception.

Here are some of the key differences between equity research and investment banking.

Work-life Balance 

12-hour days are typical for equity researchers. However, their volume of work is usually highest while initiating coverage and during earnings season. 

Investment bankers have brutal hours, they commonly have 90- to 100-hour workweeks for analysts during the busiest times. 

Recently, there has been increasing backlash to the insane number of hours that investment banking analysts have to work. The common objection is that analysts experience burnout as a result of their lack of work-life balance. 

On the other hand, this complaint is rarely heard from equity researchers. 

Visibility 

ER associates and analysts often receive recognition for their work. Their names are usually on the research reports they compile for a firm’s sales force, client, and media outlets. 

Media outlets often seek out senior equity research analysts because they are recognized as experts on the companies in the sector that they cover. 

Conversely, investment bankers at the junior level do not have high visibility. However, their visibility can increase as they move up in seniority and are put on high-profile deals. 

Advancement

Investment banking has a clear path for career advancement. Analysts usually stay in their role for two to three years and then become associates for three or more years. After that, they can become vice presidents or managing directors. 

ER has a less clearly defined career path. The typical progression is from associate to analyst to senior analyst to the vice president or director of research. 

Upward mobility is more common for investment bankers because they are deal makers and service the firm’s largest clients. 

Education And Designations

A bachelor’s degree is necessary for both equity research analysts and investment banking associates. 

Typically, these degrees are in fields like economics or finance, but could also include anything from chemistry to computer science. 

However, further education and training are usually required to get a job in these fields. Equity researchers will often pursue the Chartered Financial Analyst ( CFA ) designation, which is almost considered mandatory for any equity researcher. 

Aspiring investment banking associates will typically pursue a Master of Business Administration ( MBA ) degree instead of the CFA because their role is more business-oriented. 

Many investment bankers pursue their Series 7 or  Series 63   FINRA licenses to demonstrate comprehensive knowledge of financial markets , investments, and company organization. 

Required Skill Sets

Both investment bankers and equity researchers must have excellent analytical, quantitative, and technical skills. 

However, this especially applies to equity research analysts because they must carry out complicated calculations, run projection models, and prepare financial statements with tight deadlines. 

Earlier in both careers, these professionals must practice financial modeling and in-depth analysis. However, later on, the skill sets of investment bankers and equity researchers diverge.

As they become senior, investment bankers take on more managerial and client-facing responsibilities. On the other hand, research analysts must have sufficient verbal and written communication skills to carry out analysis and due diligence . 

External Opportunities

Both professions have great external opportunities because of the extensive knowledge and skills required for these roles. 

Research analysts usually exit to the buy side , while investment bankers may end up in private equity or venture capital . The buy side includes institutional investors that purchase securities for money-management purposes. 

Compensation

Both professions are very well-paid; however, investment banking is the more lucrative career path. Investment bankers receive generous salaries and substantial sign-on bonuses. 

While investment bankers can receive commissions, research analysts are not able to be compensated for investment banking revenues. 

However, research analysts can receive bonuses that are based on the success of their recommendations, the firm’s profitability, and rankings. 

Day in the life of an equity research analyst

A day in the life of an Equity Research Analyst can be classified as a very busy one. This could include starting early and finishing late. This profession is particularly demanding. Let us see what a day in the life of an equity research analyst is like.

• Check emails from salespeople and traders.
• Analyze how all of the open global stock markets are doing.
• Assess all news that is related to your assigned industry sector.
• First, you will discuss recommendations with the sales & trading team.
• All analysts must present their research and opinions on important happenings in their sector. The head of Research will offer their opinions on the overall markets.
• Check for important developments in your sector. 
• Determine whether there have been any drastic price movements in the stock market. 
• Fulfill typical duties of a research analyst (i.e. updating financial models, completing client requests).
• Keep up to date with the news.
• Explain your work to buy-side clients.
• Analyze any movements in the market of the covered company at closure.
• Make sure the client is up-to-date with any relevant market information.
• Start a new research publication piece for the next few days.
• Typically, a research analyst will complete 1 to 2 research pieces per week.
• Unless there is an earning season, the analyst may now go home. 
• In the case that it is earnings season, the analyst must prepare the result update report for the next morning. 

Who funds equity research?

Independent ER firms do not have a sales & trading division. As a result, they carry out financial analysis and charge a fee on a per report basis. At major ER firms, brokerage trades earn  fee income . 

Fee income refers to the revenue that is created by a business operation by charging its customers a fee. 

Brokerage firms (made up of investment banks and stock brokers) give investment ideas to their clients ( mutual funds , institutional investors, and retail investors) and in turn, brokerage firms receive equity trades from their clients. 

Buy-side firms include hedge funds, insurance companies, and pension funds (among other things). Sell-side firms are typically investment banks (e.g. Goldman Sachs , Credit Suisse , JPMorgan Chase , etc.) 

The role of the buy-side firm is to manage the portfolio of security and seek advice on investment decisions from sell-side analysts. This advice is given to the buy-side analysts for free.

If the buy-side firm decides to invest in the security, it may want to carry out the trade through the sell-side firm’s trading division. 

In turn, the trading division of the sell-side firm will receive a commission for executing the trade at the lowest price. 

As a result, the commission is the earnings of the research firms. 

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Equity Research: A Complete Beginner’s Guide

A Former JP Morgan Equity Analyst gives a basic overview of what equity research is, different job roles, important skills, how to approach completing a research report, and exit opportunities. It also introduces some of the basic equity research vocabulary.

By Created Kacper Borowiec (2019-01-16 21:16:00)

An exhaustive but very well-thought catalog of tutorials for individuals looking for an introduction to equity research.

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How to Ace Your Equity Research Interview: Answers to the 30 Most Common Questions

Crushing your equity research interview: master the 30 most common questions with these expert answers.

Are you gearing up for an equity research interview and feeling overwhelmed by the thought of the questions you may be asked? Don't worry, we've got you covered! In this article, we will equip you with expert answers to the 30 most common questions you're likely to encounter during an equity research interview.

From market analysis and valuation techniques to industry trends and financial modeling, we will provide you with comprehensive insights and actionable tips that will help you ace your interview.

Our team of experienced professionals has curated this guide to ensure that you not only have a solid foundation of knowledge but also the ability to confidently articulate your thoughts and stand out from other candidates.

By mastering the 30 most common questions, you'll be well-prepared to showcase your understanding of the industry and prove your value as a potential equity research analyst.

Don't let the fear of the unknown hold you back. It's time to crush your equity research interview with confidence and come out victorious. Read on to discover the expert answers that will set you apart from the competition.

Importance of Preparing for Equity Research Interviews

Preparing for an equity research interview is crucial if you want to stand out from the crowd and secure your dream job. The competition in the finance industry is fierce, and employers are looking for candidates who not only possess the necessary technical skills but also have a deep understanding of the industry and can think critically.

By dedicating time to prepare for the interview, you demonstrate your commitment and enthusiasm for the role. It shows that you are willing to go the extra mile to succeed and that you have a genuine interest in the field of equity research.

Research the company you are interviewing with, understand their investment philosophy, and familiarize yourself with the latest industry news and trends. This will not only help you answer questions more effectively but also enable you to ask intelligent questions during the interview, showcasing your genuine interest and enthusiasm.

Lets Explore Technical, Fit and Behavioral Interview Questions

Q1- tell me the difference between cyclical and growth industries and how they are affected by external factors.

Suggested Answer: Cyclical industries are industries that experience regular ups and downs in business activity, often in line with the overall business cycle. Examples of cyclical industries include automotive, construction, and retail. These industries tend to do well when the economy is growing, but suffer during recessions.

Growth industries, on the other hand, are industries that are experiencing consistent and sustained growth. Examples of growth industries include technology, healthcare, and renewable energy. These industries tend to be less affected by the overall business cycle and continue to grow even during recessions.

External factors that can affect cyclical and growth industries include changes in government policies, technological advancements, shifts in consumer preferences, and economic conditions such as interest rates and inflation. For example, changes in tax policies or regulations can affect the construction and automotive industries, while advancements in technology can disrupt or benefit the growth of technology companies.

Q2- Where do you see the market in 5-10 years and why do you believe so?

Suggested Answer: It is difficult to predict with certainty what the stock market will look like in 5-10 years, however, based on current demographic trends, government finances, and GDP growth projections, it is likely that the S&P 500 will remain relatively stable and may even experience modest growth over this time period. Factors such as inflation, consumer spending, and the Federal Reserve's quantitative easing policies will also play a role in determining the market's performance. Additionally, the development of new technologies and the emergence of innovative new companies could also have a positive impact on the market in the long-term.

Q3- Tell me about what is the P/E ratio and how would you use it to compare companies?

Suggested Answer: The P/E ratio , or price-to-earnings ratio, is a financial ratio that compares a company's stock price to its earnings per share. It is calculated by dividing a company's current stock price by its earnings per share (EPS) . The P/E ratio is often used to measure a company's valuation and to compare the valuations of different companies.

A high P/E ratio may indicate that a company's stock is overvalued, while a low P/E ratio may indicate that a company's stock is undervalued. However, it is important to note that a high P/E ratio for one company does not necessarily mean that the company is overvalued, as different industries and sectors have different average P/E ratios.

When comparing companies, it is important to compare P/E ratios within the same industry or sector, as different industries and sectors have different average P/E ratios. For example, technology companies tend to have higher P/E ratios than utilities companies.

It's also important to consider the company's growth prospects, as companies with higher growth prospects tend to have higher P/E ratios. A company with a high P/E ratio but high growth prospects may be more attractive than a company with a lower P/E ratio but lower growth prospects.

Additionally, other factors such as debt levels, profitability, and cash flow should also be considered when evaluating a company. The P/E ratio alone should not be the only metric used to compare companies, it is one of the many metrics used to evaluate a company's performance and its future growth.

Q4- Tell me about some top Indexes in NSE and BSE?

Suggested Answer: The NIFTY 50 Index is one of the most popular and widely-followed indices in the Indian stock market. It consists of the 50 largest and most liquid stocks listed on the National Stock Exchange (NSE). Other popular indices in the NSE include the Nifty Auto, Bank, Financial Services, FMCG, IT, Media, Pharma, Private Bank, and PSU indices. On the Bombay Stock Exchange (BSE), popular indices include the SENSEX, BSE MIDCAP, BSE SMALLCAP, BSE 100, BSE 200, BSE 500, BSE Auto, BSE BankEx, BSE Consumer Durables, BSE Capital Goods, BSE FMCG, BSE HealthCare, BSE IT, BSE Metal, BSE Oil & Gas, BSE PSU, BSE TECk, BSE Realty, BSE SME IPO, S&P BSE CARBONEX, S&P BSE GREENEX, S&P BSE Shariah 50, BSE IPO, BSE POWER, and S&P BSE SmallCap indices.

Q5- Tell me about the market capitalization?

Suggested Answer: Market capitalization, often referred to as "market cap," is a measure of the value of a company. It is calculated by multiplying the current stock price of a company by the number of shares outstanding.

For example, if a company has 10 million shares outstanding and its stock price is $50 per share, its market capitalization would be $500 million.

Market capitalization is used to classify a company as small-cap, mid-cap, or large-cap. Small-cap companies have a market capitalization of less than $2 billion, mid-cap companies have a market capitalization of between $2 billion and $10 billion, and large-cap companies have a market capitalization of more than $10 billion.

The market capitalization of a company can be used as a measure of its size and can be used to compare it to other companies in the same industry or sector. For instance, a company with a large market capitalization may have more resources and be more financially stable than a company with a smaller market capitalization. However, It is important to note that market capitalization alone doesn't indicate the company's overall financial health, it should be considered along with other financial metrics such as revenue, earnings, and debt levels.

Additionally, the market capitalization can change with the stock price, it means that if a company's stock price increases, the market capitalization will increase as well, and if the stock price decreases, the market capitalization will decrease as well.

Q6- Where is the dollar vs the INR?

Suggested Answer: The current exchange rate for US Dollar (USD) to Indian Rupee (INR) is 81.41. This rate is up from 81.32 the previous market day and up from 74.41 one year ago.

Q7- What is the 10-year T-Note rate?

Suggested Answer: The 10-year T-Note rate is currently 3.482%, with an open yield of 3.398%, a day high of 3.501%, a day low of 3.389%, and a previous close of 3.399%. The current price of the 10-year T-Note is 105.2969, with a price change of -0.7188 and a price change percentage of -0.6797%. The coupon rate is 4.125% and the maturity date is November 15, 2032.

Q8- What is the price of gold 1 ounce?

Suggested Answer: The spot price for 1 ounce of gold is currently $1,934.69.

Q9- How to evaluate P/E ratio to determine if a stock is cheap If you don't have comparable companies data ?

Suggested Answer: If you don't have comparable companies data, there are a few ways to evaluate a P/E ratio to determine if a stock is cheap:

Compare the P/E ratio to historical levels: Look at the company's P/E ratio over the past few years to see if it is currently high or low compared to its historical levels. If the current P/E ratio is lower than its historical levels, it may be considered cheap.

Compare the P/E ratio to the industry average: Look at the average P/E ratio for the industry the company operates in. If the company's P/E ratio is lower than the industry average, it may be considered cheap.

Compare the P/E ratio to the broader market: Look at the P/E ratio of a broad-market index, such as the S&P 500, to see how the company's P/E ratio compares to the broader market. If the company's P/E ratio is lower than the broader market, it may be considered cheap.

Compare the P/E ratio with other valuation metrics: P/E ratio should be used in conjunction with other valuation metrics such as Price to Sales ratio(P/S) , Price to Book value (P/B) , Price to cash flow (P/CF) etc.

Q10-How to analyze different sectors of companies?

There are several ways to analyze different sectors of companies:

Research the industry: Understand the key trends, drivers and challenges that are shaping the industry. Look at the size and growth prospects of the industry, and identify any major players or new entrants.

Analyze the financials: Look at the financial statements of companies within the sector to identify key metrics such as revenue, profit margins, and return on equity. Compare these metrics across companies to identify any outliers or trends.

Evaluate the management team: Look at the leadership and management team of the companies within the sector. Assess their experience, track record, and strategic vision.

Look at the products and services: Analyze the products and services offered by the companies within the sector. Look at the quality of the products, their pricing, and the company's distribution channels.

Analyze the competition: Look at the competitive landscape of the sector, identify the key players and understand their strengths and weaknesses.

Evaluate external factors: Consider external factors such as government policies, technological advancements, shifts in consumer preferences and economic conditions that may affect the sector.

Consider valuation: Analyze the valuation of companies within the sector, including metrics such as the P/E ratio , Price to Sales ratio(P/S) , Price to Book value (P/B) , Price to cash flow (P/CF) etc.

Look at the risks: Identify and evaluate any significant risks associated with investing in the sector, such as regulatory changes, industry consolidation, or changes in consumer preferences.

It's important to note that the analysis process may vary depending on the sector, and the above-mentioned points are general guidelines. It's important to have a good understanding of the sector and the companies within it, and to use a variety of metrics and analysis techniques to build a comprehensive picture of the sector's performance and potential.

Q11- What does the cost structure like for the Manufacturing industry, How will you evaluate and what are their biggest cost components?

The cost structure for the manufacturing industry can vary depending on the type of products being produced and the manufacturing process used. However, there are some common cost components that are typically found in the manufacturing industry:

Raw materials: This includes the cost of the materials used to produce the final product, such as metals, plastics, and chemicals.

Labor: This includes the cost of wages and benefits for the employees involved in the manufacturing process, as well as any contract labor costs.

Manufacturing overhead: This includes costs such as utilities, rent, insurance, and property taxes for the manufacturing facility. It also includes costs for equipment maintenance, tooling, and supplies.

Distribution and logistics: This includes the cost of transporting the finished products from the factory to the customer, including shipping, warehousing, and inventory carrying costs.

Research and Development: This includes the costs of researching, developing, and testing new products or processes.

Selling, general and administrative expenses: This includes costs such as marketing, advertising, and administrative expenses.

To evaluate the cost structure of a manufacturing company, you can use a number of financial metrics such as cost of goods sold (COGS) as a percentage of revenue, and gross margin, which is calculated as gross profit divided by revenue. These metrics can be used to compare the company to its competitors and to industry averages.

It's important to note that the cost structure of a manufacturing company can change over time, for example, with changes in raw material prices, labor costs, or technological advancements. It's important to keep track of these changes and how they affect the company's financial performance.

Another important factor to consider is the company's production processes and whether it's able to achieve economies of scale, which could help to lower costs and improve margins. Also, the company's pricing strategies and how it responds to the market conditions and competition should also be taken into account.

Q12-Let’s say that you run a French fries franchisee You have two options The first is to increase the price of each of your existing products by 10% (imagining that there is price inelasticity) And the second option would be to increase the total volume by 10% as a result of a new product Which one should you do and why?

Suggested Answer: It depends on the specifics of your French fries franchise and the market conditions. Both options have the potential to increase revenue, but they have different implications for your business.

Increasing the price of each existing product by 10% may result in a short-term increase in revenue, but it could also lead to a decline in demand if customers are price sensitive. If the demand for your products is inelastic, meaning that changes in price do not significantly affect the quantity demanded, then this option may be a viable one. However, if the demand is elastic, meaning that changes in price do significantly affect the quantity demanded, then this option may lead to a decrease in overall revenue.

Adding a new product to your menu, on the other hand, has the potential to increase the total volume of sales without affecting the price of your existing products. This option may appeal to customers looking for something new and different, and it could lead to a 10% increase in total volume without having to risk losing customers due to a price increase. However, launching a new product also comes with its own set of costs such as R&D, marketing, and testing.

In summary, if you can increase the price of existing products without losing too much customers then the first option will be preferable. But if you think that a price increase could lead to a significant decline in demand, it would be safer to launch a new product to increase the volume. Additionally, you can also consider other options such as creating bundle deals, or offering discounts for large orders. It's important to have a good understanding of your customer base and the market conditions, and to use a variety of strategies and analysis techniques to build a comprehensive picture of the best way to increase your revenue.

Q13- What do you think the income statement would look like for a Pharma company like Sun pharma, abbott and cipla? What would their COGS be? How about their operating margin?

Suggested Answer: The income statement  for a pharmaceutical company like Sun Pharma, Abbott, and Cipla would likely include the following key elements:

Revenues: This would include revenues from the sale of pharmaceutical products, such as prescription drugs and over-the-counter medications.

Cost of goods sold (COGS): This would include the cost of raw materials, labor, and manufacturing overhead associated with producing the pharmaceutical products. For a pharmaceutical company, the cost of goods sold would include the cost of the active pharmaceutical ingredients (API) and other raw materials, as well as the cost of manufacturing and packaging.

Gross profit: This is calculated by subtracting COGS from revenues. Gross profit represents the amount of revenue that a company has left over after accounting for the direct costs of producing its products.

Operating expenses: This includes expenses such as research and development, sales and marketing, general and administrative expenses.

Operating income: This is calculated by subtracting operating expenses from gross profit. Operating income represents the amount of money a company has left over after accounting for its direct costs of production and its operating expenses.

Other income/expenses: This includes items such as interest income, foreign exchange gains/losses, and other income or expenses that are not directly related to the company's main operations.

Net income: This is calculated by subtracting other income/expenses from the operating income. Net income represents the company's overall profit or loss.

The COGS and operating margin of a pharmaceutical company can vary depending on a number of factors, such as the type of products they produce, the complexity of their manufacturing process, and the level of competition in the market. However, on average, the operating margin of a pharmaceutical company is around 20-30%.

It's important to note that the above-mentioned details are not specific to Sun Pharma, Abbott, and Cipla, and it's important to check their financial statements for more accurate information. Additionally, the income statement of a pharma company is affected by many factors such as patent expiration, regulatory environment, competition, and the global economy. Therefore, it's important to keep track of these factors and how they affect the company's financial performance.

Q14- I see that you have no market experience and what should make me believe that this is something you are seriously interested in?

Suggested Answer: I understand that a lack of market experience can be a concern when considering me for a role in Equity Research. However, I have done extensive research into the industry and have a strong understanding of the key concepts and processes. My dedication to improving my knowledge and skills in this field is evidenced by my willingness to learn and grow within this profession. I have developed a strong analytical mindset and excellent problem-solving skills that I believe will make me a valuable asset to any Equity Research team. Furthermore, I am passionate about the industry and have a keen interest in the financial markets, which I believe will make me a great fit for this role.

Q15- Why are you looking for an equity research job?

Suggested Answer: I am looking for an equity research job because I believe that I have the skills necessary to perform the job duties. I have a strong understanding of accounts and financial fundamentals and have the ability to analyze the specifics of individual companies to determine if the security is appropriately priced. Additionally, I have the ability to create financial models to calculate the future value of equity shares, and I am familiar with the financial statements of the companies I research.

Q16- Which stock do you pitch for me and why?

Suggested Answer: The stock I would pitch depends on which company you are interviewing for. Generally, when pitching a stock for an equity research interview, you should focus on a company that is relevant to the firm and sector you are interviewing for. You should also make sure to research the company thoroughly, identify the key drivers that are affecting the stock, and consider the valuation metrics and catalysts for the company. Additionally, you should also consider any potential risks and how you can mitigate them.

Q17- Can you tell me what valuation techniques you use if I ask you to value a company?

Suggested Answer: There are several valuation techniques that can be used to value a company, some of the most common ones include:

Discounted Cash Flow (DCF) analysis: This is a method of valuing a company based on the present value of its future cash flows. It involves forecasting the company's future cash flows, and then discounting them back to their present value using a discount rate. This method is considered to be one of the most accurate ways of valuing a company as it takes into account both the company's current and future performance.

Price to Earnings (P/E) ratio : This is a method of valuing a company based on the ratio of its stock price to its earnings per share (EPS). It is used to compare a company's valuation to that of its peers and to the overall market.

Price to Sales (P/S) ratio : This is a method of valuing a company based on the ratio of its stock price to its revenue. It is used to evaluate a company's valuation by comparing its stock price to its revenue.

Price to Book (P/B) ratio : This is a method of valuing a company based on the ratio of its stock price to its book value (the value of its assets minus its liabilities). It is used to evaluate a company's valuation by comparing its stock price to its book value.

Dividend Discount Model (DDM) : This is a method of valuing a company based on the present value of its future dividends. It involves forecasting the company's future dividends, and then discounting them back to their present using a discount rate.

Comparable Company Analysis: This method involves analyzing the financials of similar companies within the same industry and using those companies' valuations as a benchmark for the company being valued.

It's important to note that no single method is perfect, and a combination of these methods should be used to get the best estimate of a company's value. Additionally, it's important to keep track of the company's financial performance, its growth prospects, the industry trends, and the overall economic conditions.

Q18- To your best ability What do you think is the main reason stocks fell by 20%?

Suggested Answer: It is difficult to determine the main reason for a stock market decline without more specific information about the timing and circumstances of the decline. However, some possible reasons for a 20% decline in stock prices include:

Economic downturn: A recession or other economic downturn can lead to a decline in corporate profits and consumer spending, which in turn can lead to a decline in stock prices.

Interest rate changes:  A sudden increase in interest rates can affect the ability of companies to borrow money and invest in growth, and this can lead to a decline in stock prices.

Political instability: Political instability, such as a war or a change in government policies, can create uncertainty and lead to a decline in stock prices.

Natural disasters: Natural disasters can disrupt production and supply chains, and this can lead to a decline in stock prices.

Geopolitical risks: Geopolitical risks such as trade tensions, sanctions, or other global events can affect the global economy and lead to a decline in stock prices.

Company-specific events: A company-specific event such as a financial scandal, a product recall, or a change in management can lead to a decline in stock prices.

It's important to note that a decline of 20% in stock prices could be a result of a combination of these reasons. Additionally, it's important to keep in mind that stock market fluctuations are normal and are to be expected. It is also important to note that past performance does not indicate future performance, and it is important to conduct thorough research and analysis before making any investment decisions.

Q19- Tell me about what PE ratio is a popular valuation metric and what the PE ratio number tries to tell us?

Suggested Answer: The Price-to-Earnings (P/E) ratio is a popular valuation metric that compares a company's current stock price to its earnings per share (EPS) . It is calculated by dividing the current stock price by the EPS. The P/E ratio is used to measure the relative value of a company's stock and to compare it to the value of other companies in the same industry or to the overall market.

A high P/E ratio indicates that investors are willing to pay a premium for the company's earnings, while a low P/E ratio indicates that the stock is relatively cheap compared to the company's earnings. However, it's important to note that a high P/E ratio does not necessarily mean that a stock is overpriced, and a low P/E ratio does not necessarily mean that a stock is underpriced.

The P/E ratio tries to tell us how much investors are willing to pay for a company's earnings. A high P/E ratio may indicate that investors have high expectations for the company's future earnings growth, while a low P/E ratio may indicate that investors have lower expectations for the company's future earnings growth. However, it's important to keep in mind that the P/E ratio is only one metric and should be used in conjunction with other financial metrics such as revenue, earnings, and debt levels, to get a more comprehensive picture of the company's performance.

Additionally, it's important to note that different sectors have different P/E ratio averages, a company in a sector with higher growth prospects may have a higher P/E ratio, while a company in a sector with lower growth prospects may have a lower P/E ratio. Therefore, it's important to compare the P/E ratio of a company to the average P/E ratio of the industry or sector it operates in.

Q20- Tell me something about yourself that is not on your resume?

Suggested Answer: When it comes to equity research, I'm highly knowledgeable and passionate. I'm constantly reading and researching the stock market, and I'm always looking for new and creative ways to analyze information. Additionally, I'm a great communicator and have a great ability to explain complex financial concepts in a simple and concise way. I'm also able to build strong relationships with clients and colleagues, which is essential in the equity research field.

Q21- Explain to me the type of financial modelling?

Suggested Answer: Financial modeling is the process of creating a numerical representation of a financial situation, typically using spreadsheet software, in order to make informed decisions. There are several types of financial models, each with their own specific purpose and structure.

Financial forecasting models: These models are used to predict future financial performance based on historical data and other relevant information. They can be used to forecast revenue, expenses, cash flow, and other financial metrics.

Valuation models: These models are used to estimate the intrinsic value of a company or asset. The most common valuation models include discounted cash flow (DCF) analysis, price-to-earnings (P/E) ratio, and comparable company analysis.

Budget and planning models: These models are used to create a financial plan for a company, such as a budget or a strategic plan. They can be used to forecast revenue, expenses, and cash flow, and to identify potential risks and opportunities.

Risk and sensitivity models: These models are used to analyze the potential risks and uncertainties that a company may face. They can be used to simulate various scenarios and to estimate the potential impact of different risks on the company's financial performance.

Monte Carlo simulation models: These models are used to analyze the potential outcomes of a decision under uncertainty. They use probability distributions and random sampling to simulate different scenarios and to estimate the potential range of outcomes.

Real-options models: These models are used to evaluate investment opportunities by considering the flexibility of a company. They include the ability to make investment decisions based on future developments in the market or industry.

It's important to note that financial modeling is an iterative process, and the model should be updated and refined as new information becomes available. Additionally, the choice of the financial model should be based on the specific purpose and the type of decision that needs to be made, and it's important to have a good understanding of the assumptions and limitations of the model.

Q22- Do you understand the DCF model and Walk me through the process?

Suggested Answer: Yes, I understand the Discounted Cash Flow (DCF) model. It is a method of valuing a company based on the present value of its future cash flows. The process of creating a DCF model typically includes the following steps:

Forecasting future cash flows: The first step in creating a DCF model is to forecast the company's future cash flows. This typically involves forecasting revenue, costs, and expenses for a period of time, usually 5 to 10 years.

Determine the discount rate: The next step is to determine the discount rate, which is used to discount the future cash flows back to their present value. The discount rate is typically based on the company's cost of capital and reflects the risk associated with the cash flows.

Calculate the present value of future cash flows: Once the future cash flows and discount rate have been determined, the present value of the cash flows can be calculated by dividing each year's cash flow by (1 + discount rate) to the power of the number of years in the future.

Sum the present value of future cash flows: The final step is to sum the present value of all the future cash flows to arrive at the total present value of the company.

Terminal Value calculation: Terminal value is the value of a company beyond the projection period and it is calculated by estimating the perpetuity growth rate and multiplying it by the last year's projected free cash flow(FCF) and then discounting it back to the present value.

Sum the present value of terminal value: The final step is to add the present value of the terminal value to the present value of the future cash flows.

It's important to note that the DCF model is sensitive to the assumptions used in forecasting future cash flows and determining the discount rate, so it's important to consider a range of scenarios and to be aware of the limitations of the model. Additionally, the DCF model

Q23- Can you tell me about any previous research work you have done?

Suggested Answer: I have done extensive research in the field of equity research. My research has focused on the evaluation of companies and their stocks, which includes analyzing their financials and market trends. I have also done analysis on valuation techniques such as Discounted Cash Flow Analysis, Comparable Companies Analysis, and Sensitivity Analysis. In addition, I have done research into the capital markets and the function they serve. Finally, I have done research on the most important factors to consider when analyzing a company, how to determine if a company is undervalued or overvalued, and the most common ratios and metrics used for company analysis.

Q24- Can you tell me which industry has a future?

Suggested Answer: The five industries with a promising future are Analytics and Big Data, Cybersecurity, Health Care for the Aging, Renewable Energy and Drones. These industries are expected to experience rapid growth in the coming years due to their relevance to the current technological landscape.

Q25- What type of valuation work have you done in the previous company?

Suggested Answer: I have worked on a variety of valuation techniques including Discounted Cash Flows, Comparable Companies Analysis, Free Cash Flows , Free Cash Flow to Equity , and Sensitivity Analysis. I have also worked on Equity Research Reports, where I have been responsible for writing and analyzing the industry overview, company financials and ratios, valuations and projections, management overview and recommendation.

Q26- Tell me about which industry you like to analyze and why?

Suggested Answer: One popular industry for analysis is technology. The technology industry is constantly evolving and is often at the forefront of innovation. Companies in this industry can have high growth potential and can be a source of disruptive technologies. Analyzing technology companies can be interesting because of the potential for significant returns on investment, the potential for new products and services, and the potential for market disruption.

Another popular industry for analysis is healthcare. The healthcare industry is a large and growing sector that is essential to the well-being of society. Companies in this industry can have a significant impact on people's lives, and they can be a source of innovative medical treatments and technologies. Analyzing healthcare companies can be interesting because of the potential for long-term growth, the potential for new products and services, and the potential for positive social impact.

Retail industry is also interesting to analyze, as it is a consumer-facing industry that reflects the broader economy and consumer sentiment. Companies in this industry can provide insight into consumer spending patterns, trends in e-commerce, and the health of brick-and-mortar retail.

Furthermore, the financial industry is also a popular one for analysis, as it provides insight into the broader economy and the performance of different sectors. Companies in this industry can provide insight into the performance of different asset classes, the health of the banking sector, and the overall performance of the global economy.

Ultimately, the choice of industry to analyze depends on an individual's interest, expertise and the decision they want to make. It's important to conduct a thorough research and analysis of the industry and the company before making any investment decisions.

Q27- Suppose I am given a task to make a report for an automobile company. How will you gather data and information?

Suggested Answer: Gathering data and information for a report on an automobile company can involve several steps and sources. Some possible methods to gather data and information include:

Financial statements: One of the most important sources of information is the company's financial statements, such as the income statement, balance sheet, and cash flow statement. These statements provide a detailed overview of the company's financial performance and can be used to analyze trends, profitability, and liquidity.

Industry reports and publications: Another important source of information is industry reports and publications. These can provide information on the overall performance of the automobile industry, trends, and market conditions.

Company press releases and annual reports:  Company press releases and annual reports can provide information on the company's strategy, performance, and plans for future growth.

Government data: Government data can provide information on the market size, growth rate, import/export data, and other macroeconomic data of the automobile industry.

Online research: Online research can be used to gather information on the company's competitors, the company's market position, and the company's reputation.

Surveys and customer feedback: Surveys and customer feedback can be used to gather information on customer satisfaction, brand perception, and customer loyalty.

Consultation with experts: Consultation with experts in the field of automobile industry, such as industry analysts, consultants, or professors can provide valuable insight and information.

It's important to note that the data and information gathered should be reliable, accurate, and up-to-date. Additionally, it's important to ensure that the data and information gathered is relevant to the report and the decision that needs to be made.

Q28- Being a successful analyst what skills do you have ?

Suggested Answer: To be a successful analyst in Equity Research, I have strong numerical skills, good knowledge of finance and investments, and excellent communication skills. I am also detail-oriented, analytical, and have excellent writing skills. Furthermore, I have the ability to analyze data and financial statements, understand investments and markets, and have a deep understanding of the industry. Additionally, I have the ability to think critically and come up with innovative solutions.

Q29- What is the main reason that stocks go up or down?

Suggested Answer: Stocks go up or down based on a variety of factors, some of the most important ones include:

Company-specific news and events: This includes factors such as earnings reports, product launches, management changes, and mergers and acquisitions. Positive news and events can cause a stock to go up, while negative news and events can cause a stock to go down.

Economic conditions: Economic conditions such as interest rates, GDP growth, and inflation can affect the overall performance of the stock market and individual stocks. Strong economic conditions can cause stocks to go up, while weak economic conditions can cause stocks to go down.

Industry trends: Industry trends such as technological advancements, changing consumer preferences, and regulatory changes can affect the performance of individual stocks and sectors. Positive industry trends can cause stocks to go up, while negative industry trends can cause stocks to go down.

Political and geopolitical events:  Political and geopolitical events such as elections, war, and trade tensions can affect the stock market and individual stocks. Uncertainty caused by these events can cause stocks to go down, while positive developments can cause stocks to go up.

Market sentiment: Market sentiment refers to the overall mood of investors and traders. Positive market sentiment can cause stocks to go up, while negative market sentiment can cause stocks to go down.

It's important to note that the stock market is complex and influenced by multiple factors, therefore, it's hard to predict the performance of the stock market or a specific stock. Additionally, it's important to conduct thorough research and analysis before making any investment decisions.

Q30- Give me your overview on the economy and the stock market?

Suggested Answer: The economy and the stock market are closely related and can affect each other in a number of ways. A strong economy can lead to higher corporate profits and consumer spending, which can in turn lead to higher stock prices. Conversely, a weak economy can lead to lower corporate profits and consumer spending, which can lead to lower stock prices.

Economic indicators such as GDP, inflation, and interest rates can also affect the stock market. For example, a low unemployment rate and a high GDP growth rate are usually considered to be positive indicators for the stock market, as they suggest a strong economy. On the other hand, high inflation and interest rates can be negative for the stock market, as they can lead to a decrease in consumer spending and corporate profits.

It's important to note that the stock market is complex and influenced by multiple factors, including global events, political and geopolitical developments, and company-specific events. Additionally, it's important to conduct thorough research and analysis before making any investment decisions.

Q31- What are the current interest rates and what do you think about in future?

Suggested Answer: The current average interest rate for a 30-year fixed mortgage is 6.33%. Bankrate's forecast shows rates continuing to break records, with the average credit card rate rising to 20.5 percent by the end of 2023. Long-term interest rates are likely to stay below 4% this year, trending down as the economy slows and the inflation rate comes down. The Federal Reserve has forecast the Federal Funds Rate to be 2.6% by 2023, before levelling off. If the historically high inflation of 2022 continues to dissipate and the economy falls into a recession, it's likely mortgage rates will decrease in 2023. Kiplinger's Economic Outlooks project the Fed-Funds Rate and 10-year Treasury yield to be 1.75% and 2.75%, respectively, in 2026.

Q32- If interest rates were to go up then which sectors do you think would benefitted and which would stand to disadvantage?

Suggested Answer: Interest rate changes can have a significant impact on different sectors of the economy. Generally speaking, when interest rates go up, it becomes more expensive for companies and consumers to borrow money, which can have a negative impact on certain sectors.

Sectors that may be negatively impacted by a rise in interest rates include:

Real estate: Higher interest rates can make it more expensive for individuals and companies to borrow money to buy or refinance properties. This can lead to a decrease in demand for real estate and a decline in property prices.

Consumer discretionary: Higher interest rates can make it more expensive for consumers to borrow money to buy cars, appliances, and other consumer goods. This can lead to a decrease in consumer spending and a decline in demand for consumer discretionary goods.

Financials: Higher interest rates can make it more expensive for banks to borrow money, which can lead to a decline in their profits. Additionally, when interest rates rise, the spread between short-term and long-term interest rates narrows, which can negatively impact the profitability of the banks.

Sectors that may be positively impacted by a rise in interest rates include:

Utilities: Utility companies often have long-term debt and a stable cash flow, which means they can afford to pay higher interest rates on their debt.

Consumer staples: Companies that produce consumer staples such as food, beverages, and household goods are less affected by changes in interest rates as they tend to be necessities and have a stable demand.

Technology: Companies in the technology sector, such as semiconductors, software, and internet-based companies, are less impacted by interest rate changes as they are driven by innovation and advancements in technology rather than interest rate changes

It's important to note that interest rate changes can have both positive and negative impacts on different sectors and that interest rate changes are only one of the many factors that can influence the stock market. Additionally, it's important to conduct thorough research and analysis before making any investment decisions.

Q33- If you were to get a job here then which sector or industry would you select and why?

Suggested Answer: In general, the selection of a sector or industry to focus on would depend on an individual's interests, expertise, and career goals. Some factors that can be considered when selecting a sector or industry include:

Growth prospects: Some sectors and industries have higher growth prospects than others, which can provide opportunities for companies to increase their revenue and profits.

Competitive landscape: Some sectors and industries are more competitive than others, which can affect the profitability of companies operating in those sectors.

Regulatory environment: Some sectors and industries are more heavily regulated than others, which can affect the profitability of companies operating in those sectors.

Industry trends: Some sectors and industries are at the forefront of innovation and technology, which can provide opportunities for companies to develop new products and services.

Personal interest: It's important to choose an industry or sector that you have an interest in, as it will help you to stay motivated and engaged in the research process.

Ultimately, the choice of a sector or industry to focus on would depend on an individual's specific interests, expertise, and career goals. It's important to conduct thorough research and analysis of the sector or industry and the companies operating in that sector before making a decision.

Q34- How would you compare Consumer Durable firms ?

When comparing consumer durable firms, there are several factors that can be considered, including:

Financial performance: This includes factors such as revenue, profits, earnings per share (EPS) , return on equity (ROE) , and other financial metrics. Comparing these metrics across firms can provide insight into the financial performance of each firm.

Market share:  Market share is an important factor to consider when comparing firms in the consumer durable industry. Firms with a larger market share are likely to have more pricing power and be more stable than firms with a smaller market share.

Product and brand portfolio: Firms with a diversified product and brand portfolio are likely to be more stable than firms that rely on a single product or brand.

Distribution network: Distribution network is an important factor to consider when comparing firms in the consumer durable industry. Firms with a strong distribution network are likely to be able to reach more customers and generate more sales than firms with a weaker distribution network.

Competitive Landscape: Consumer durable firms compete with each other based on product quality, price, and services offered. Evaluating the strengths and weaknesses of the firms in terms of these factors can provide an insight into their competitiveness.

Management and leadership: The management team and leadership of a company can have a significant impact on the performance of the company. Compare the management teams and leadership of the firms to assess their experience, track record, and stability.

Valuation Metrics: Valuation metrics such as Price to Earnings ratio , Price to Sales ratio , Price to Book ratio , and enterprise value to EBITDA  can be used to compare the relative valuations of the firms.

It's important to note that these are just a few of the many factors that can be considered when comparing consumer durable firms, and that the choice of factors to consider will depend on the specific decision that needs to be made. Additionally, it's important to conduct thorough research and analysis before making any investment decisions.

Q35- Suppose you write a research report BUY recommendation for any IT stock for long term and you know 2 days later the stock price falls by 7%. What would be your recommendation?

Suggested Answer: If the stock price falls by 7% two days after I've made a BUY recommendation, I would consider the current market sentiment and analyze the potential risk factors that may have caused the stock to fall. I would also analyze the current market conditions and the outlook for the industry. If I still find potential for growth and the risks are manageable, I would likely maintain my recommendation. However, if the risks are significant and the outlook for the industry is poor, I would likely change my recommendation to HOLD or SELL.

Q36- How many companies are listed in BSE and NSE?

Suggested Answer: There were around 5,500 companies listed on the Bombay Stock Exchange (BSE) and around 1,800 companies listed on the National Stock Exchange (NSE) in India.

Q37- Tell me about the Analyst to Associate ratio?

Suggested Answer: The analyst to associate ratio refers to the ratio of junior-level analysts to more senior-level associates in an investment banking or financial services firm. In general, the ratio is used as an indicator of the firm's overall staffing levels and can provide insight into the firm's level of efficiency and productivity.

The ratio can vary widely depending on the firm and the specific area of the business. For example, in a research department, the ratio of analysts to associates may be higher than in an investment banking department, where the ratio may be lower. In general, a lower ratio indicates that the firm may be more focused on cost-cutting and efficiency, while a higher ratio may indicate that the firm is more focused on growth and expansion.

It's also worth noting that a lower ratio would generally imply a higher workload for each individual analyst and therefore a higher turnover rate.

Q38-Suppose you are concall in quarterly earnings and you have to ask a question to the CEO about the future earnings then what would you ask first?

Suggested Answer: What are the key drivers of the company's projected earnings growth for the next quarter and beyond? Are there any specific initiatives or plans in place that the company believes will drive increased revenue and profitability?

Q39-How do you rank buy-side clients?

Suggested Answer: Buy-side clients, such as mutual funds, hedge funds, and pension funds, can be ranked based on a variety of factors, including assets under management (AUM), performance, and trading activity. Here are a few examples of how buy-side clients might be ranked:

Assets under management (AUM): Clients with larger AUM tend to be more attractive to sell-side firms, as they may have more capital to invest and can generate more trading volume. Clients can be ranked by AUM, with the largest clients at the top of the list.

Performance: Clients that have a history of strong investment performance may be more attractive to sell-side firms, as they may be more likely to generate returns for their investors. Clients can be ranked by their past performance, with the best-performing clients at the top of the list.

Trading activity: Clients that trade more frequently can generate more revenue for sell-side firms. Clients can be ranked by the amount of trading activity they generate, with the most active clients at the top of the list.

Service needs: Clients that have specific service needs such as research, execution, or customization might be ranked higher based on the firm's capabilities to fulfill those needs.

It's worth noting that these are not the only ways to rank buy-side clients, and different firms may use different criteria based on their own priorities and business models. However, these examples can be a good starting point to evaluate and rank buy-side clients.

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Equity Research Certifications

Explore the top Equity Research certifications that are important to a successful career.

Getting Started as a Equity Research

• What is a Equity Research
• How To Become
• Certifications
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• Work-Life Balance
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Getting Certified as a Equity Research

Top equity research certifications, best equity research certifications, certified equity professional (cep).

• Bachelor's degree or equivalent work experience in the field of equity compensation
• Completion of the CEP Institute's Level 1 exam for entry-level knowledge of equity compensation
• Passing of the Level 2 exam, which requires a deeper understanding of equity compensation including taxation, accounting, and corporate and securities law
• Passing of the Level 3 exam, demonstrating mastery of complex equity compensation issues and strategic application of knowledge
• Adherence to the CEP Institute's Code of Ethics and Professional Conduct
• Continuing education requirements to maintain certification status after passing all three levels

Financial Risk Manager (FRM)

• A bachelor's degree or equivalent education/work experience.
• Passing the FRM Exam Part I.
• Passing the FRM Exam Part II within 4 years of passing Part I.
• Two years of professional full-time financial risk management work experience.
• Registration and enrollment in the FRM program through the GARP website.
• Agreement to adhere to the GARP Code of Conduct.

Chartered Alternative Investment Analyst (CAIA)

• A bachelor’s degree or the equivalent education/experience, which could include at least four years of professional experience or a combination of professional experience and education totaling at least four years.
• Passing both Level I and Level II exams, which assess a candidate's knowledge of alternative investments and their ability to apply this knowledge in practical situations.
• Agreement to adhere to the CAIA Association's Member Agreement, including the Professional Conduct Statement and Candidate Responsibility Statement.
• Completion of a minimum of 200 hours of study for each level of the exam is recommended.
• Payment of exam fees for both Level I and Level II exams, as well as any applicable enrollment fees.
• After passing both exams, candidates must become a member of the CAIA Association to receive the CAIA Charter and commit to ongoing continuing education requirements.

Certified International Investment Analyst (CIIA)

• A minimum of three years of professional experience in investment-related fields.
• A completed degree from a recognized university or equivalent higher education, or an equivalent qualification in a related field.
• Membership in a national/regional society or association that is a full member of the ACIIA.
• Successful completion of national exams set by the local member society or association, which are prerequisites for the CIIA final examinations.
• Passing the CIIA final examinations, which consist of two levels: the Foundation Level and the Final Level.
• Adherence to the ACIIA's Code of Ethics and Standards of Professional Conduct.

Certificate in Investment Performance Measurement (CIPM)

• A bachelor's degree or equivalent education/work experience
• Two years of professional experience in investment performance or related activities
• Membership in the CFA Institute, which requires adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct
• Completion of the CIPM Program, which includes two levels: Level I and Level II exams
• Understanding of the Global Investment Performance Standards (GIPS)
• Agreement to adhere to the CIPM Association Code of Ethics and Standards of Professional Conduct

Chartered Market Technician (CMT)

• A bachelor’s degree or higher in any discipline from an accredited educational institution is recommended but not required.
• Completion of the CMT Program requires passing three exam levels, which are typically taken in succession.
• For those without a bachelor's degree, a minimum of three years of professional work experience in a professional analytical or investment management capacity is required.
• Membership in the CMT Association is required to enroll in the CMT Program and to maintain the CMT designation after passing the exams.
• Adherence to the CMT Association’s Code of Ethics is required for all candidates and charter holders.
• Continuing education is encouraged after obtaining the CMT certification to maintain proficiency in the field of technical analysis.

Financial Modeling & Valuation Analyst (FMVA)

• Bachelor's degree or equivalent in finance, accounting, economics, or a related field is recommended but not required
• Basic understanding of financial accounting and corporate finance principles
• Proficiency in Excel is highly recommended
• Completion of all FMVA program courses (currently 29 courses, including electives)
• Passing the FMVA final exam with a minimum score requirement
• Payment of the FMVA program enrollment fee

Chartered Financial Analyst (CFA)

• A bachelor's degree or equivalent: Candidates must have completed a bachelor's degree or be in the final year of their bachelor's degree program at the time of registration.
• Work experience: Four years of professional work experience in the investment decision-making process, or a combination of professional work and university experience that totals at least four years.
• Passport: A valid international travel passport is required for enrollment and exam registration.
• Professional conduct: Agreement to adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct.
• Exam registration: Candidates must register for each level of the CFA exam and pay the associated fees.
• Membership: After passing all three levels of the CFA exam, candidates must become members of the CFA Institute to receive the CFA charter.

Certified Investment Management Analyst (CIMA)

• A minimum of three years of professional experience in financial services or investment management.
• A bachelor’s degree from an accredited institution or an equivalent combination of education and experience.
• Completion of the CIMA certification program, which includes an executive education component through a registered program provider.
• Passing the CIMA certification examination, which assesses competency in investment management and advisory services.
• Agreement to adhere to the Investments & Wealth Institute's Code of Professional Responsibility and Rules and Guidelines for Use of the Marks.
• Completion of 40 hours of continuing education every two years after certification to maintain the credential.

Chartered Financial Consultant (ChFC)

• A minimum of three years of full-time business experience within the five years preceding the awarding of the certification.
• Completion of the required coursework through The American College of Financial Services, which includes nine college-level courses.
• Adherence to The American College Code of Ethics and Procedures, which includes a commitment to ongoing professional education and ethical conduct.
• Passing comprehensive exams for each course, which test knowledge of financial planning processes and applications.
• A bachelor’s degree is not required but is strongly recommended.
• There are no specific prerequisites in terms of courses or certifications required before starting the ChFC program, but a background in finance or a related field can be beneficial.

A Better Way to Present Certifications

Benefits of having a equity research certification, how to choose the best equity research certification.

• Alignment with Specialization: Equity Research encompasses various sectors and financial instruments. Identify your area of interest or specialization—be it technology, healthcare, consumer goods, or any other sector—and choose a certification that deepens your knowledge in that niche. Specialized certifications can make you a valuable asset within your preferred domain.
• Reputation and Industry Recognition: The prestige of a certification can greatly influence your professional standing. Opt for certifications from well-regarded institutions or organizations that are widely recognized in the field of finance and investment. A certification with a strong reputation can open doors and signify to employers and clients that you are serious about your craft.
• Curriculum Rigor and Skill Enhancement: Scrutinize the curriculum to ensure it covers essential skills such as financial modeling, valuation techniques, and report writing. The best certifications will challenge you and provide comprehensive training that not only covers theory but also practical application, thereby enhancing your analytical and decision-making abilities.
• Continuing Education and Career Progression: Consider certifications that offer continuing education opportunities to keep you updated with the latest industry developments. Equity Research is dynamic, and ongoing learning is crucial. Certifications that facilitate career progression by including advanced levels or specializations can be particularly beneficial for long-term growth.
• Networking and Professional Community: Evaluate whether the certification program offers access to a professional community or network. Being part of a community can provide support, mentorship, and opportunities for collaboration. Networking with fellow professionals can lead to job opportunities, partnerships, and a deeper understanding of the equity research landscape.

Preparing for Your Equity Research Certification

Certification faqs for equity researchs, is getting a equity research certification worth it, do you need a certification to get a job as a equity research, can equity research certifications help pivoters make the transition into finance from another career path.

Equity Research Tools & Software

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Loop Capital Markets, LLC

2025 summer intern -equity research.

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Position Summary:

Loop Capital’s Global Equity Division delivers industry and company-specific fundamental stock analyses, with coverage in oilfield services and equipment, internet, media and entertainment, semiconductors and transportation, to enhance clients’ portfolio decisions.

Loop Capital’s Equity Research team seeks a summer intern to support Equity Research members on projects, as well as day-to-day tasks. The intern will assist in the development of market presentations and examine market data and industry trends, providing findings to the team.

Essential Duties and Responsibilities:

• Participate in data gathering and input for stock analysis
• Support the team in the research process
• Gain exposure to research platforms such as FactSet

Qualifications:

• Undergraduate or Graduate student with a record of high academic achievement
• Strong quantitative background
• Interest in analyzing industry trends, annual reports and financial filings
• Excellent written and verbal communication skills
• Proficiency in Microsoft Office Suite, most specifically Excel

Work Environment:

This position works Monday – Friday in-office, 40-hours per week for 10-weeks.