What Is Equity Research?

What Is Equity Research?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

Equity research is a detailed analysis conducted by financial experts to provide predictions and recommendations on buying, holding, or selling equity securities. Using various techniques and models, researchers and analysts assess the value of companies and their stocks to predict potential investment returns. This research includes assessments of public financial reports, financial forecasting, ratio analysis, and discussions with company officials. The findings are then compiled into an equity research report which investors use to make informed buying, selling, or holding decisions.

Related Questions

1. What is an equity research report?

An equity research report is a document prepared by an analyst or a group of analysts who cover a particular sector or industry. The report contains in-depth company and industry analyses, financial forecasts, and investment recommendations. It’s primarily used by internal and external clients to make investment decisions.

2. Who uses equity research?

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Equity research is mainly used by investors, both individual and institutional, who rely on these analyses for investment decision-making. Investment banks, portfolio managers, and mutual fund firms are some of the primary users of equity research.

3. What are the main components of equity research?

The key components of equity research include company overview, industry analysis, financial modelling and forecasting, valuation, investment thesis, and recommendations. Each of these components provides in-depth insight into the company’s performance and potential future value.

4. How is equity research different from financial analysis?

While both involve studying company financials, equity research is more specialized. It focuses on evaluating a company’s stock or equity to help investors make informed decisions. On the other hand, financial analysis is broader, examining a company’s financial health for various purposes like auditing, budgeting, and financial planning.

5. What skills are essential for equity research?

Some must-have skills for equity research include strong analytical abilities, advanced understanding of financial modelling, excellent attention to details, impressive communication skills, and a deep knowledge of the stock market and different industry sectors.