Equity research is the process of analyzing the business and financial performance of companies to make investment recommendations or investment decisions. The main institutions that conduct serious equity research are investment banks (sell-side) and investment firms (asset managers, hedge funds, pension funds, etc). However, there are a number of smaller players like independent research platforms (fintech companies), individual investors and financial advisors that also conduct equity research. The main goal of equity analysts is to evaluate the future prospects of companies and to predict correctly the future stock prices of those companies. Stock analysts usually develop industry expertise, read financial reports, attend conferences and talk to company management/investors to gain a deeper understanding of specific companies or sectors. I have heard some analysts saying that this is one of the best jobs in the world because one get’s paid for learning about companies. Analysts who work at investment banks have several key responsibilities. Firstly, they need to attend earning calls and obtain valuable information about their companies or industries. Secondly, equity researchers need to write and publish reports on the companies that they cover. Thirdly, they need to make investment recommendations (Buy, Sell or Hold) and set target prices. For example, the stock price of Apple at the moment is 172.69 and based on my analysis I expect the price to go down to 140 in the next months (this is not investment advice). As an analyst covering tech stocks, I would give Apple a Hold or even Sell rating depending on my conviction level with a target price of 140. Sell ratings are quite rare and analysts tend to give Hold ratings even if they have a bearish view of a company. Finally, analysts need to talk with traders, salespeople, clients and express their views.

A typical day of an equity analyst looks like this:

06:00 am - Wake up (I know that it is quite early) 07:00 am - Arrive at the office and read the most important news 07:30 am - Participate in the morning meeting with traders salespeople and other analysts 08:30 am - Answer emails from clients and colleagues from other teams (Sales & Trading) 10:00 am - Go for a coffee and catch up with colleagues from the same team/department 11:00 am - Get economic and financial data/reports. Read, analyze them and start crunching numbers 1 pm - Go for lunch 2 pm - Receive some urgent tasks from your boss (prepare some tables, spreadsheets, etc) 3 pm - Do financial modeling and write research reports 7 pm - Leave the office 7:30 pm - Meet friends for dinner and drinks 10 pm - Go home and get ready for the next day

The typical schedule looks very different during earning seasons because analysts need to attend earning calls, produce and update many reports. The working hours increase significantly at the expense of one’s social life. There is no need to work on the weekends unless one has important work that he/she didn’t finish during the week. I went to the office on weekends a few times and I always encountered the same people. Most of the time, they didn’t have any important work to do but they didn’t have social life or very afraid of losing their job. Earlier this year, I published another post on the pros and cons of working in equity research. You may find it useful if you are considering becoming an equity analyst. Here is the link: https://www.canarywharfian.co.uk/threads/why-equity-research-is-a-great-career.707/

I like equity research but sometimes I feel that the pace is too slow because one needs to read and analyze a lot of information. Moreover, it is not easy to evaluate the impact of one’s work. For instance, one might wonder whether 100 or 0 clients have read his/her report and whether they benefited from his work or not.

I hope that there are other people who have worked in equity research on this forum and I would love to hear your experiences. Did you enjoy the good work-life balance (compared to M&A, DCM, etc)? Do you think that analysts add value or markets are efficient and the world doesn’t need them?