Equity Research Analyst: What Is It? and How to Become One?
The financial market has seen significant growth in recent years and this has led to more opportunities for employment. Perhaps this is one of the reasons why more and more people are striving to make a career in the equity market. With the right qualifications and experience, there are many avenues that can be explored in this field. Equity Research Analyst is an important post within financial firms, which requires a person with a lot of skills and experience. However, to become one, a person has to undergo a rigorous training and education process. This blog will look at the different aspects of becoming an Analyst.
Equity research analyst is an investment banking job and is a key investment banking job that is used to analyze companies and their stocks. Equity researchers are an important part of an investment banking firm's research division. They are also known as equity analysts. Equity research analyst is a hot job market, and if you aren't in it, you probably want to be in it. The job market is highly competitive and the best way to get there is to learn everything you can about how the equity research analyst job works and how you can become an equity research analyst. This blog will look at what you need to do to become an equity research analyst.
What is Equity Research?
Equity research is a firm’s specialized study of stocks that the firm covers. These studies are used by portfolio managers to help them determine which stocks to buy, hold, or sell.
Equity research is the activity on Wall Street in which investment analysts in an investment bank or brokerage firm publish research reports on publicly traded companies, in the form of an equity research report, to help investors make informed decisions when buying or selling stocks. It involves studying the market and financial statements of a firm and providing analysis that covers the valuation of a company's stock.
Once a company has been selected to be investigated, a detailed analysis is performed on the company's financial statements. It starts with a company overview and then compares financial projections with the analyst's own projections. The analyst then presents an outlook of what they expect the company's performance to look like. Getting the analyst's opinion on the stock is the main purpose of an equity research report.
Career Path of an Equity Research Analyst
As an equity research analyst, you will be working in the research division of one of the following types of firms:
- Investment banks
- Insurance companies
- Asset management companies
- Investment advisory firms or
- Boutique investment firms
These firms can either be buy-side or sell-side.
If you're working on the buy-side, you'll be collaborating with investment managers. Your responsibilities will include managing portfolios and making investments to help your clients grow their wealth.
If you're working on the sell-side, your research will be used to help buy-side analysts choose the best securities for their client's portfolios.
Qualifications Needed to Become an Equity Research Analyst
Although there is no specific qualification that is compulsory to become an equity research analyst, graduates in the field of commerce, finance, or investment are usually preferred. If you don’t have a degree in any of these fields, you can pick up certifications like the Chartered Financial Analyst (CFA) to make yourself eligible for the role of an equity research analyst.
How to Start a Career in Equity Analysis?
There are two ways you can enter the finance industry – with an MBA or by freelancing.
Why an MBA? Investment banks in India visit top MBA campuses to offer students internships and job placements. These internships are essential because research divisions prefer candidates who have some experience in finance before becoming full-time analysts. Once you graduate from the program, you can either get a job from the placements or find one on your own.
While an MBA may give you a leg up in becoming an analyst, it's by no means the only way to do it. Value-intensive internships and freelancing are both great ways to make your journey smooth.
Freelancing is especially a great way to build your resume. The more projects you take on, the more experience you'll gain - not to mention the network of established analysts you'll have the opportunity to connect with and learn from.
Salary of Equity Analysts
The average base salary for equity research analysts, regardless of work experience, ranges from Rs. 4,03,159 to Rs. 8,29,142 per year, according to Glassdoor, LinkedIn, and Payscale.
Equity Research is the part of investment banking that analyzes and reports on stocks, hence the name. There are a few major Wall Street firms that have equity research departments. These include JP Morgan, Morgan Stanley, Goldman Sachs, Credit Suisse, and Barclays Capital. Equity research analysts cover several different industries. Analysts will either cover a small group of similar firms or one particular firm. They will research things like the company's past performance, its management, its financial performance, and its future potential. The analysts' job is to find stocks that they think the stock market will underrated or overrated. These are stocks that they think they can predict with great accuracy.
If you want to become an equity research analyst, and are just entering the investment banking domain, then our e-learning course in Investment Banking can prove to be helpful for you. The Investment banking course by Skillograph has been designed and structured per the HRDC guidelines for human resource development and skill training.