Equity Analyst Job Description

Equity analysts, also known as equity research analysts, provide financial guidance and expert knowledge of stocks and bonds to investment advisors, brokers, and individual investors. This role combines data gathering and assessment with financial modeling and forecasting to make informed decisions about investment opportunities and risks on the buy side, sell side, or both.

Equity analysts work in a variety of organizations within the finance industry, providing quantitative analysis and data interpretation for brokerage houses, investment banks, and trading organizations. They may also assist with valuation leading up to a stock’s initial public offering (IPO), determining the stock’s value, capitalization, and target price.

 

Equity Analyst Duties and Responsibilities

While the duties of an equity analyst may vary depending on their organization, many of the postings that we examined shared several core responsibilities:

Analyze Security Performance and Pricing

The primary duty of the equity analyst is gathering and assessing data related to securities including stocks, bonds, and exchange-traded funds. The equity analyst uses a variety of data-gathering and analysis tools and techniques ranging from analyzing financial reports and statements to examining the market performance of similar companies to gather a complete picture of stock and bond performance and investment opportunities.

Develop Forecasts and Projections

Equity analysts also develop financial projections and forecasts that are used by investment advisors and brokers. In this aspect of the role, the equity analyst uses many data-modeling programs and methodologies, combined with performance and financial data they have gathered and analyzed, to provide investment advisors with all of the information they need to make financially sound decisions regarding stocks and bonds.

Provide Investment Advice

Another major responsibility of the equity analyst is providing direct advice on securities to buy, sell, and hold. This aspect of the role is highly collaborative, requiring the analyst to develop and deliver reports to sales, trading, and investment teams to aid in decision-making and ensure profitability through intelligent, well-researched investments and strategies. Equity analysts may also provide models and reports at the investment committee’s request.

Monitor Industry Trends and News

In this role, equity analysts need to stay on top of industry trends and news related to stocks and bonds that they are examining. Because markets can shift rapidly based on news and reports, the equity analyst needs to ensure that the data they provide to investment professionals is constantly up to date and reflects both large-scale and smaller changes in the market from day to day, since these can have a big impact on valuation and performance.

Prepare Internal and External Reports

Throughout the analysis and valuation process, equity analysts also prepare a number of reports for both internal use and public presentation. For equity analysts working with valuation of stocks leading up to an IPO, this can include developing a prospectus and issuing data to the media prior to the IPO. Internal reports include detailed financial data and analysis based on cash flow reports, industry analysis, and risk factors.

 

Equity Analyst Skills and Qualifications

Equity analysts provide brokers and investors with expert knowledge related to stocks and bonds. Most workers in this role have at least a bachelor’s degree, several years of research analysis experience, and the following skills:

  • Analytical thinking – equity analysts should have extensive experience assessing financial data and using it to make informed decisions about stock and bond performance
  • Market knowledge – thorough knowledge of a particular market is also an asset for equity analysts, since this allows the analyst to consider their data in terms of the market or sector as a whole
  • Data modeling – equity analysts should be skilled with a variety of data-modeling techniques and should be able to prepare reports and presentations that present useful and actionable data
  • Trendspotting – this role also requires the ability to notice, track, and analyze market trends and opportunities and determine how to strategically invest to capitalize on growing or untapped sectors
  • Communication skills – equity analysts should be strong communicators, able to succinctly present data and information to brokers, investors, and advisors in both verbal and written formats

 

Tools of the Trade

Equity analysts tend to work in office settings and should be familiar with standard office equipment and software in addition to the following:

  • Financial services platforms (Bloomberg, Capital IQ)
  • Financial modeling software (Quantrix, Maplesoft)

 

Equity Analyst Education and Training

Equity analysts typically have at least a bachelor’s degree in a field such as business administration or finance. Additionally, most equity analysts have two to four years of experience as research analysts, working under a senior equity analyst. Many companies prefer to hire candidates with a master’s degree in a relevant field such as finance, business administration, or economics. Completing a certification course through the Chartered Financial Analyst (CFA) Institute can help expand employment opportunities.

 

Equity Analyst Salary and Outlook

Equity analyst pay can depend on many factors, including whether the analyst works on the buy side or sell side. According to the Bureau of Labor Statistics (BLS), financial analysts (including equity analysts) earn a median annual salary of $84,300. The highest-paid 10 percent of financial analysts earn over $165,580 per year, while the lowest-paid analysts earn less than $51,780 annually.

The BLS estimates that employment for financial analysts will grow at a faster-than-average rate of 11 percent through 2026.

 

Helpful Resources

We searched the web and found a number of resources if you’d like to learn more about a career as an equity analyst:

Association of Financial Analysts – the AoFA is a global professional organization for financial analysts, providing job search assistance and opportunities to connect with other industry professionals

Equity Research for the Technology Investor: Value Investing in Technology Stocks – this book explores equity analysis with a focus on technology stocks, but also focuses on larger concerns within the financial analysis process

Charted Financial Analyst Institute – equity analysts can expand their career opportunities and expertise by achieving certification through the CFA Institute, which provides examinations and educational materials focused on advanced analysis tools

Best Practices for Equity Research Analysts: Essentials for Buy-Side and Sell-Side Analysts – read this book to learn about equity analysis techniques and practices, discover effective forecasting methods, and explore ethical considerations

 

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