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Equity Research Report

Guide to Understanding an Equity Research Report

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sample equity research report

What is an Equity Research Report?

Sell-side equity research analysts primarily communicate their ideas through published equity research reports.

In this article, we describe the typical components of a research report and show how they are used by both the buy side and sell side .

Equity research reports are usually available for a fee through financial data providers .

Near the bottom of the article, we include a downloadable sample equity research report by JP Morgan.

Equity Research Report Timing

Quarterly earnings release vs. initiating coverage report.

Barring a new company initiation or an unexpected event, equity research reports tend to immediately precede and follow a company’s quarterly earnings announcements.

That’s because quarterly earnings releases tend to be catalysts for stock price movements, as earnings announcements likely represent the first time in 3 months that a company provides a comprehensive financial update.

Of course, research reports are also released immediately upon a major announcement like an acquisition or a restructuring . Additionally, if an equity research analyst initiates coverage on a new stock, he/she will likely publish a comprehensive initiation piece.

How to Interpret Equity Research Reports

“buy”, “sell” and “hold” ratings.

Equity research reports are one of several types of key documents analysts have to gather before diving into a full-scale  financial modeling project. That’s because research reports contain estimates used widely by investment bankers to help drive the assumptions underpinning  3-statement models and other models commonly built on the sell side .

On the buy side , equity research is also widely used. Like investment bankers , buy-side analysts find the insights in sell-side equity research reports helpful. However, equity research is used to help the buy side professional understand the “street consensus,” which is important for determining the extent to which companies have an unrealized value that may justify an investment.

The three main types of ratings ascribed by equity research analysts are the following:

  • “Buy” Rating → If an equity research analyst marks a stock as a “Buy”, the rating is a formal recommendation that upon analyzing the stock and the factors that drive price movements, the analyst has determined the stock is a worthwhile investment. The markets tend to interpret the rating as a “Strong Buy”, especially if the report’s findings resonate with investors.
  • “Sell” Rating → In order to preserve their existing relationships with the management teams of publicly traded companies, equity analysts must strike the right balance between releasing objective analysis reports (and recommendations) and maintaining an open dialogue with the company’s management team. That said, a “Sell” rating is rather uncommon in occurrence because the market is aware of the relationship dynamics (and will interpret it as a “Strong Sell”). Otherwise, the analyst’s rating can be framed to not cause a steep decline in the market share price of the underlying company, while still releasing their findings to the public.
  • “Hold” Rating → The third rating, a “Hold”, is fairly straightforward as it indicates that the analyst concluded that the projected performance of the company is in line with either its historical trajectory, industry comparable companies, or the market as a whole. In other words, there is a lack of a catalyst event that could cause a substantial swing — either up or down — in the share price. As a result, the recommendation is to continue to hold and see if any notable developments emerge, but regardless, continuing to hold the stock not too risky and minimal volatility in pricing should be anticipated in theory.

In addition, two other common ratings are “Underperform” and “Outperform”.

  • “Underperform” Rating → The former, an “Underperform”, indicates the stock may lag behind the market, but the near-term slowdown does not necessarily mean that an investor should liquidate their positions, i.e. a moderate sell.
  • “Outperform” Rating → The latter, an “Outperform”, is a recommendation to buy a stock because it appears likely to “beat the market.” However, the anticipated excess return above the market return is proportionally minor; hence, the “Buy” rating was not offered, i.e. a moderate buy.

Sell-Side Equity Research Report Anatomy

A full equity research report, as opposed to a short one-page “note”, usually includes:

  • Investment Recommendation : The equity research analyst’s investment rating
  • Key Takeaways : A one-page summary of what the analyst thinks is about to happen (ahead of an earnings release) or his/her interpretation of the key takeaways from what has just happened (immediately after the earnings release)
  • Quarterly Update : Comprehensive detail about the preceding quarter (when a company has just reported earnings)
  • Catalysts : Details about the company’s near-term (or long-term) catalysts that are developing are discussed here.
  • Financial Exhibits : Snapshots of the analyst’s earnings model and detailed forecasts

Equity Research Report Example: JP Morgan Hulu (PDF)

Use the form below to download a research report from JP Morgan by the analyst covering Hulu.

Get the Sample Equity Research Report

sample equity research report

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I was looking for a template In word format, it would be very helpful. Nice webpage!

Thanks, but unfortunately we don’t have a Word template as these research reports have additional built-in functionality (charts, legal disclosures, etc).

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This article provides a report example, not a template. But we encourage you check out our financial statement modeling course!

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What’s in an Equity Research Report?

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sample equity research report

Even though you can easily find real equity research reports via the magical tool known as “Google,” we’ve continued to get questions on this topic.

Whenever I see the same question over and over again, you know what I do: I bash my head in repeatedly and contemplate jumping off a building…

…and then I write an article to answer the question.

To understand an equity research report, you must understand what goes into a  stock pitch first.

The idea is similar, but an ER report is a “watered-down” version of a stock pitch.

But banks have some very solid reasons for publishing equity research reports:

Why Do Equity Research Reports Matter?

You might remember from previous articles that equity research teams do not spend that much time writing these reports .

Most of their time is spent speaking with management teams and institutional investors and sharing their views on sectors and companies.

However, equity research reports are still important because:

  • You do still spend some time doing the required modeling work (~15%) and writing the reports (~20%).
  • You might have to write a research report as part of the interview process.

For example, if you apply to an equity research role or an equity research internship , especially in an off-cycle process, you might be asked to draft a short report on a company.

And then in roles outside of ER, you need to know how to interpret reports quickly and extract the key information.

Equity Research Reports: Myth vs. Reality

If you want to understand equity research reports, you have to understand first why banks publish them: to earn higher commissions from trading activity.

A bank wants to encourage institutional investors to buy more shares of the companies it covers.

Doing so generates more trading volume and higher commissions for the bank.

This is why you rarely, if ever, see “Sell” ratings, and why “Hold” ratings are far less common than “Buy” ratings.

Different Types of Equity Research Reports

One last point before getting into the tutorial: There are many different types of research reports.

“Initiating Coverage” reports tend to be long – 50-100 pages or more – and have tons of industry research and data.

“Sector Reports” on entire industries are also very long. And there are other types, which you can read about here .

In this tutorial, we’re focusing on the “Company Update” or “Company Note”-type reports, which are the most common ones.

The Full Tutorial, Video, and Sample Equity Research Reports

For our full walk-through of equity research reports, please see the video below:

Table of Contents:

  • 1:43: Part 1: Stock Pitches vs. Equity Research Reports
  • 6:00: Part 2: The 4 Main Differences in Research Reports
  • 12:46: Part 3: Sample Reports and the Typical Sections
  • 20:53: Recap and Summary

You can get the reports and documents referenced in the video here:

  • Equity Research Report – Jazz Pharmaceuticals [JAZZ] – OUTPERFORM [BUY] Recommendation [PDF]
  • Equity Research Report – Shawbrook [SHAW] – NEUTRAL [HOLD] Recommendation [PDF]
  • Equity Research Reports vs. Stock Pitches – Slides [PDF]

If you want the text version instead, keep reading:

Watered-Down Stock Pitches

You should think of equity research reports as “watered-down stock pitches.”

If you’ve forgotten, a hedge fund or asset management stock pitch ( sample stock pitch here ) has the following components:

  • Part 1: Recommendation
  • Part 2: Company Background
  • Part 3: Investment Thesis
  • Part 4: Catalysts
  • Part 5: Valuation
  • Part 6: Investment Risks and How to Mitigate Them
  • Part 7: The Worst-Case Scenario and How to Avoid It

In a stock pitch, you’ll spend most of your time and energy on the Catalysts, Valuation, and Investment Risks because you want to express a VERY different view of the company .

For example, the company’s stock price is $100, but you believe it’s worth only $50 because it’s about to report earnings 80% lower than expectations.

Therefore, you recommend shorting the stock. You also recommend purchasing call options at an exercise price of $125 to limit your losses to 25% if the stock moves in the opposite direction.

In an equity research report, you’ll still express a view of the company that’s different from the consensus, but your view won’t be dramatically different.

You’ll spend more time on the Company Background and Valuation sections, and far less time and space on the Catalysts and Risk Factors. And you won’t even write a Worst-Case Scenario section.

If a company seems overvalued by 50%, a research analyst would probably write a “Hold” recommendation, say that there’s “uncertainty around several customers,” and claim that the company’s current market value is appropriate.

Oh, and by the way, one risk factor is that the company might report lower-than-expected earnings.

The Four Main Differences in Equity Research Reports

The main differences are as follows:

1) There’s More Emphasis on Recent Results and Announcements

For example, how does a recent product announcement, clinical trial result, or earnings report impact the company?

You’ll almost always see recent news and updates on the first page of a research report:

Equity Research Report Cover Page

These factors may play a role in hedge fund stock pitches as well, but more so in short recommendations since timing is more important there.

2) Far-Outside-the-Mainstream Views Are Less Common

One comical example of this trend is how all 15 equity research analysts covering Enron rated it a “buy” right before it collapsed :

Equity Research Report for Enron With Buy Recommendation

Sell-side analysts are far less likely to point out that the emperor has no clothes than buy-side analysts.

3) Research Reports Give “Target Prices” Rather Than Target Price Ranges

For example, the company is trading at $50.00 right now, but we expect its price to increase to exactly $75.00 in the next twelve months.

This idea is completely ridiculous because valuation is always about the range of possible outcomes, not a specific outcome.

Despite horrendously low accuracy , this practice continues.

To be fair, many analysts do give target prices in different cases, which is an improvement:

Equity Research Report with Target Share Price Range

4) The Investment Thesis, Catalysts, and Risk Factors Are “Looser”

These sections tend to be “afterthoughts” in most reports.

For example, the bank might give a few reasons why it expects the company’s share price to rise: the company will capture more market share than expected, it will be able to increase its product prices more rapidly than expected, and a competitor is about to go bankrupt.

However, the sell-side analyst will not tie these factors to specific share-price impacts as a buy-side analyst would.

Similarly, the report might mention catalysts and investment risks, but there won’t be a link to a specific valuation impact from each factor.

So the typical stock pitch logic (“We think there’s a 50% chance of gaining 80% and a 50% chance of losing 20%”) won’t be spelled out explicitly:

equity-research-report-04

Your Sample Equity Research Reports

To illustrate these concepts, I’m sharing two equity research reports from our financial modeling courses :

The first one is from the valuation case study in our Advanced Financial Modeling course , and the second one is from the main case study in our Bank Modeling course .

These are comprehensive examples, backed by industry data and outside research, but if you want a shorter/simpler example you can recreate in a few hours, the Core Financial Modeling course has just that.

In each case, we started by creating traditional HF/AM stock pitches and valuations and then made our views weaker in the research reports.

The Typical Sections of an Equity Research Report

So let’s briefly go through the main sections of these reports, using the two examples above:

Page 1: Update, Rating, Price Target, and Recent Results

The first page of an “Update” report states the bank’s recommendation (Buy, Hold, or Sell, sometimes with slightly different terminology), and gives recent updates on the company.

For example, in both these reports we reference recent earnings results from the companies and expectations for the next fiscal year:

ERR Buy Recommendation

We also give a “target price,” explain where it comes from, and give our estimates for the company’s key financial metrics.

We mention catalysts in both reports, but we don’t link anything to a specific valuation impact.

One problem with providing a specific “target price” is that it must be based on specific multiples and specific assumptions in a DCF or DDM.

So with Jazz, we explain that the $170.00 target is based on 20.7x and 15.3x EV/EBITDA multiples for the comps, and a discount rate of 8.07% and Terminal FCF growth rate of 0.3% in the DCF.

Next: Operations and Financial Summary

Next, you’ll see a section with lots of graphs and charts detailing the company’s financial performance, market share, and important metrics and ratios.

For a pharmaceutical company like Jazz, you might see revenue by product, pricing and # of patients per product per year, and EBITDA margins.

For a commercial bank like Shawbrook, you might see loan growth, interest rates, interest income and net income, and regulatory capital figures such as the Common Equity Tier 1 (CET 1) and Tangible Common Equity (TCE) ratios:

equity-research-report-06

This section of the report explains how the analyst or equity research associate forecast the company’s performance and came up with the numbers used in the valuation.

The valuation section is the one that’s most similar in a research report and a stock pitch.

In both fields, you explain how you arrived at the company’s implied value, which usually involves pasting in a DCF or DDM analysis and comparable companies and transactions.

The methodologies are the same, but the assumptions might differ substantially.

In research, you’re also more likely to point to specific multiples, such as the 75 th percentile EV/EBITDA multiple, and explain why they are the most meaningful ones.

For example, you might argue that since the company’s growth rates and margins exceed the medians of the set, it deserves to be valued at the 75 th percentile multiples rather than the median multiples:

equity-research-report-07

Investment Thesis, Catalysts, and Risks

This section is short, and it is more of an afterthought than anything else.

We do give reasons for why these companies might be mis-priced, but the reasoning isn’t that detailed.

For example, in the Shawbrook report we state that the U.K. mortgage market might slow down and that regulatory changes might reduce the market size and the company’s market share:

Equity Research Report Investment Risks

Those are legitimate catalysts, but the report doesn’t explain their share-price impact in the same way that a stock pitch would.

Finally, banks present Investment Risks mostly so they can say, “Well, we warned you there were risks and that our recommendation might be wrong.”

By contrast, buy-side analysts present Investment Risks so they can say, “There is a legitimate chance we could lose 50% – let’s hedge against that risk with options or other investments so that our fund does not collapse .”

How These Reports Both Differ from the Corresponding Stock Pitches

The Jazz equity research report corresponds to a “Long” pitch that’s much stronger:

  • We estimate its intrinsic value as $180 – $220 / share , up from $170 in the report.
  • We estimate the per-share impact of each catalyst: price increases add 15% to the share price, more patients from marketing efforts add 10%, and later-than-expected generics competition adds 15%.
  • We also estimate the per-share impact from the risk factors and conclude that in the worst case , the company’s share price might decline from $130 to $75-$80. But in all likelihood, even if we’re wrong, the company is simply valued appropriately at $130.
  • And then we explain how to hedge against these risks with put options.

The same differences apply to the Shawbrook research report vs. the stock pitch, but the stock pitch there is a “Short” recommendation where we claim that the company is overvalued by 30-50%.

And that sums up the differences perfectly: A Short recommendation with 30-50% downside in a stock pitch turns into a “Hold” recommendation with roughly equal upside and downside in a sell-side research report.

I’ve been harsh on equity research here, but I don’t want to disparage it too much.

There are many positives: You do get more creativity than in IB, it might be better for hedge fund or asset management exits, and it’s more fun to follow companies than to grind through grunt work on deals.

But no matter how you slice it, most equity research reports are watered-down stock pitches.

So, make sure you understand the “strong stuff” first before you downgrade – even if your long-term goal is equity research.

You might be interested in:

  • The Equity Research Analyst Career Path: The Best Escape from a Ph.D. Program, or a Pathway into the Abyss?
  • Private Equity Regulation : 2023 Changes and Impact on Finance Careers
  • Stock Pitch Guide: How to Pitch a Stock in Interviews and Win Offers

sample equity research report

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.

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

Read below or Add a comment

15 thoughts on “ What’s in an Equity Research Report? ”

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Hi Brian, what softwares are available to publish Research Reports?

sample equity research report

We use Word templates. Some large banks have specialized/custom programs, but not sure how common they are.

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Is it possible if you can send me a template in word of an equity report? It will help the graduate stock management fund a lot at Umass Boston.

We only have PDF versions for these, but Word should be able to open any PDF reasonably well.

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Do you also provide a pre constructed version of an ER in word?

We have editable examples of equity research reports in Word, but we generally only share PDF versions on this site.

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Hey Brian Can you please help me with coverage initiated reports on oil companies. I could not find them on the net. I need to them to get equity research experience, after which only I will be able to get into the field. I searched but reports could not be found even for a price. Thanks

We have an example of an oil & gas stock pitch on this site… do a search…

https://mergersandinquisitions.com/oil-gas-stock-pitch/

Beyond that, sorry, we cannot look for reports and then share them with you or we’d be inundated with requests to do that every day.

No worries. Thanks!

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Hi! Brian! Do u know how investment bankers design and layout an equity research? the software they use. like MS Word, Adobe Indesign or something…? And how to create and layout one? Thanks

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where can I get free equity research report? I am a Chinese student and now study in Australia. Is the Morning Star a good resource for research report?

Get a TD Ameritrade to access free reports there for certain companies.

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How do you view the ER industry since the trading commission has been down 50% since 2007. And there are new in coming regulation governing the ER reports have to explicitly priced and funds need to pay for the report explicity rather than as a service comes free with brokerage?

In addition the whole S&T environment is becoming highly automated.

People have been predicting the death of equity research for over a decade, but it’s still here. It may not be around in 100 years, but it will still be around in another 10 years, though it will be smaller and less relevant.

Yes, things are becoming more automated, but the actual job of an equity research analyst or associate hasn’t changed dramatically. A machine can’t speak with investors to assess their sentiment on a company – only humans can do that.

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How to Write an Equity Research Report

By Brian Dzingai |

 Reviewed By Rebecca Baldridge |

November 15, 2022

What is an Equity Research Report?

An equity research report may focus on a specific stock or industry sector, currency, commodity, or fixed-income instrument, or even on a geographic region or country, and generally make buy or sell recommendations. These reports are produced by a variety of sources, ranging from market research firms to in-house research departments at large financial institutions or boutique investment banks.

Key Learning Points

  • An equity research report is a document prepared by an analyst that provides a recommendation to buy, hold, or sell shares of a public company. 
  • An equity research report is a document prepared by an analyst who is part of an investment research team in a brokerage firm or investment bank
  • It provides an overview of the business, the industry it operates in, the management team, the company’s financial performance, and risks, and includes a target price and investment recommendation.
  • It is intended to help an investor decide whether to invest in a stock.

Equity Research Report Structure

An equity research report can include varying levels of detail, and although there is no industry standard when it comes to formatting, there are common elements to all equity research reports. This guide includes some fundamental features and information that should be considered essential to any research report, as well as some tips for making your analysis and report as effective as possible. 

Access the download to see a real-world example of an Equity Research Report, annotated to show each element discussed below. 

Basic Information

The research report should begin with basic information about the firm, including the company’s ticker symbol, the primary exchange where its shares are traded, the primary sector and industry in which it operates, the current stock price and market capitalization, the target stock price, and the investment recommendation. 

In addition, a security’s liquidity and float are important considerations for the equity analyst. The liquidity of a stock refers to the degree to which it can be purchased and sold without affecting the price. The analyst should understand that periods of financial stress can affect liquidity. A stock’s float refers to the number of shares that are publicly owned and available for trading and generally excludes restricted shares and insider holdings. The float of a stock can be significantly smaller than its market capitalization and thus is an important consideration for large institutional investors, especially when it comes to investing in companies with smaller market capitalizations. Consequently, a relatively small float deserves mention. Finally, it is good practice to identify the major shareholders of a firm. 

Business Description 

This section should include a detailed description of the company and its products and services. It should convey a clear understanding of the company’s economics, including a discussion of the key drivers of revenues and expenses. Much of this information can be sourced from the company itself and from its regulatory filings as well as from industry publications. 

Industry Overview and Competitive Positioning

This section should include an overview of the industry dynamics, including a competitive analysis of the industry. Most firms’ annual reports include some discussion of the competitive environment. A group of peer companies should be developed for competitive analysis. The “Porter’s Five Forces” framework for industry analysis is an effective tool for examining the health and competitive intensity of an industry. Production capacity levels, pricing, distribution, and stability of market share are also important considerations. 

It is important to note that there are different paths to success. Strength of brand, cost leadership, and access to protected technology or resources are just some of the ways in which companies set themselves apart from the competition. Famed investor Warren Buffett describes a firm’s competitive advantage as an economic “moat.” He says, “In business, I look for economic castles protected by unbreachable moats.” 

Investment Summary

This section should include a brief description of the company, significant recent developments, an earnings forecast, a valuation summary, and the recommended investment action. If the purchase or sale of a security is being advised, there should be a clear and concise explanation as to why the security is deemed to be mispriced. That is, what is the market currently not properly discounting in the stock’s price, and what will prompt the market to re-price the security? 

This section should include a thorough valuation of the company using conventional valuation metrics and formulas. Equity valuation models can derive either absolute or relative values. Absolute valuation models derive an asset’s intrinsic value and generally take the form of discounted cash flow models. Relative equity valuation models estimate a stock’s value relative to another stock and can be based on a number of different metrics, including price/sales, price/earnings, price/cash flow, and price/book value. Because model outputs can vary, more than one valuation model should be used. 

Financial Analysis

This section should include a detailed analysis of the company’s historical financial performance and a forecast of future performance. Financial results are commonly manipulated to portray firms in the most favorable light. It is the responsibility of the analyst to understand the underlying financial reality. Accordingly, a careful reading of the footnotes of a company’s financial disclosures is an essential part of any examination of earnings quality. Non-recurring events, the use of off-balance-sheet financing, income and reserve recognition, and depreciation policies are all examples of items that can distort a firm’s financial results. 

Financial modeling of future results helps to measure the effects of changes in certain inputs on the various financial statements. Analysts should be especially careful, however, about extrapolating past trends into the future. This is especially important in the case of cyclical firms. Projecting forward from the top or bottom of a business cycle is a common mistake. 

Finally, it can be informative to use industry-specific financial ratios as part of the financial analysis. Examples include proven reserves/shares for oil companies, revenue/subscribers for cable or wireless companies, and revenue/available rooms for the hotel industry. 

Investment Risks

This section should address potential negative industry and company developments that could pose a risk to the investment thesis. Risks can be operational or financial or related to regulatory issues or legal proceedings. 

Although companies are generally obligated to discuss risks in their regulatory disclosures, risks are often subjective and hard to quantify (e.g., the threat of a competing technology). It is the job of the analyst to make these determinations. Of course, disclosures of “qualified opinions” from auditors and “material weakness in internal control over financial reporting” should be automatic red flags for analysts. 

Environmental, Social & Governance (ESG)

This section should include information on how the company manages the relationships related to Environmental, Social, and Governance. Below are some examples within these three areas that can have a lasting impact on the company’s short- and long-term prospects:

  • E nvironmental – how is the company working towards the conservation of the natural world? This can include climate change and carbon emissions, air and water pollution, energy efficiency, waste management, and more. 
  • S ocial – how does the company consider people and relationships? This can include community relations, human rights, gender and diversity, labor standards, customer satisfaction, and employee engagement. 
  • G overnance – what are the standards for running the company? This can include board composition, audit committee structure, executive compensation, succession planning, leadership experience, and bribery and corruption policies. 

Enroll in our online ESG course and learn to identify the principles of ESG and how they are applied to investment strategies.

If you are interested in a career as an equity research analysts or in fixed income research, our online course covers all the key skills needed as either a sell side analyst in an investment bank or a buy side analyst working in an investment management firm.  

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The Value of Equity Research

Equity research is an invaluable asset for anyone looking to stay up-to-date on market and industry trends. In this guide, you will learn about the type of information contained in equity research, the value it offers to corporate professionals, and how the most advanced teams are already leveraging the expertise of Wall Street’s top analysts to inform critical business decisions.

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Introduction.

Equity research, which forms a multi-billion dollar industry for investment banks, is produced by thousands of analysts worldwide to provide the market with valuable information on companies, industries, and market trends. Today, over 90% of equity research is consumed by fund managers, who have the Wall Street relationships to acquire it and the analyst resources to mine it for insights. For corporate strategy professionals who lack this access, however, equity research has historically been challenging to obtain and navigate.

To help corporations circumvent these challenges, AlphaSense has introduced Wall Street Insights, the first and only equity research collection purpose-built for the corporate user. Through the AlphaSense platform, any business making strategic plans or product decisions, conducting competitive analysis, evaluating M&A, or engaging in investor relations can now tap into the deep industry expertise of Wall Street’s top analysts.

What is Equity Research?

Equity research is developed by sell-side firms to help investors and hedge fund managers discover market opportunities and make informed investment decisions. Increasingly, this expert analysis has also been identified by forward-looking corporations as a highly valuable tool to inform strategic decision-making.

There are thousands of sell-side firms that employ expert analysts around the globe to write equity research for the market. The majority of firms producing equity research are hyper-focused and only have one or two analysts developing reports on a specific industry. However, larger firms, such as Morgan Stanley and Bank of America, collectively employ thousands of analysts to write reports on thousands of public companies–covering everything from TMT giants to niche products.

Equity research analysts are deep subject matter experts who are often former executives, industry veterans, or academics. These analysts conduct in-depth research and publish reports on corporations, industries, and macro trends, offering an expert lens into a subject.

Historically, over 90% of equity research was consumed by buy-side fund managers, who had the Wall Street relationships to acquire it and the analyst resources to mine it for insights. For buy-side professionals, equity research is a critical tool to inform sound investment decisions backed by expert insights.

Today, equity research is increasingly relied upon by corporate teams as a high-value source of information. These teams leverage equity research to make strategic business plans, conduct competitive analysis, evaluate mergers and acquisitions, and make product and marketing decisions. For corporations, the value of equity research lies in the detailed coverage of their company, their competitors, and how they are performing related to the marketplace they are within.

What is an Equity Research Report?

An equity research report is a document prepared by an equity research analyst that often provides insight on whether investors should buy, hold, or sell shares of a public company. In an equity research report, an analyst lays out their recommendation, target price, investment thesis, valuation, and risks.

There are multiple forms of equity research, including (but not limited to):

sample equity research report

An update report that highlights the latest news, company announcements, earnings reports, Buy Sell Hold ratings, M&A activity, anything that impacts the value of the company.

sample equity research report

A comprehensive company report that is compiled when an analyst or firm initiates their coverage of a stock. Initiation reports cover all of the divisions and products of a company in-depth to provide a baseline of what the company is and how it is performing. Initiation reports can be tens to hundreds of pages long, depending on the complexity of a company.

sample equity research report

General industry updates that cover a group of similar companies within a sector. Industry-specific reports typically dive into additional factors such as loan growth, interest rates, interest income, net income, and regulatory capital.

sample equity research report

A report compiled by research firms either daily or weekly. These reports can often be a great place to get more in-depth insight on commodities and also get market opinions from commodity analysts or traders who write the reports.

sample equity research report

A quick 1-2 page report that comments on a news release from a company or other quick information

What is Included in a Typical Equity Research Report?

Research reports don’t need to follow a specific formula. Analysts at different investment banks have some latitude in determining the look and feel of their reports. But more often than not, research reports follow a certain protocol of what investors expect them to look like.

A typical equity research report includes in-depth industry research, management analysis, financial histories, trends, forecasting, valuations, and recommendations for investors. Sometimes called broker research reports or investment research reports, equity research reports are designed to provide a comprehensive snapshot that investors or corporate leaders can leverage to make informed decisions.

Here’s a quick overview of what a standard equity research report covers:

sample equity research report

This section covers events, such as quarterly results, guidance, and general company updates.

sample equity research report

Upgrades/Downgrades are positive or negative changes in an analyst’s outlook of a particular stock valuation. These updates are usually triggered by qualitative and quantitative analysis that contributes to an increase or decrease in the financial valuation of that security.

sample equity research report

Estimates are detailed projections of what a company will earn over the next several years. Valuations of those earnings estimates form price targets. The price target is based on assumptions about the asset’s future supply & demand and fundamentals.

sample equity research report

Management Overview and Commentary helps potential investors understand the quality and makeup of a company’s management team. This section can also include a history of leadership within the company and their record with capital allocation, ESG, compensation, incentives, stock ownership. Plus, an overview of the company’s board of directors.

sample equity research report

This section covers competitors, industry trends, and a company’s standing among its sector. Industry research includes everything from politics to economics, social trends, technological innovation, and more.

sample equity research report

Historical Financial Results typically cover the history of a company’s stock, plus expectations based on the current market and events surrounding it. To determine if a company is at or above market expectations, Analysts must deeply understand the history of a specific industry and find patterns or trends to support their recommendations.

sample equity research report

Based on the market analysis, historical financial results, etc., an analyst will run equity valuation models. In some cases, analysts will run more than one valuation model to determine the worth of company stock or asset.

Absolute valuation models : calculates a company’s or asset’s inherent value.

Relative equity valuation models : calculates a company’s or asset’s value relative to another company or asset. Relative valuations base their numbers on price/sales, price/earnings, price/cash flow.

sample equity research report

An equity research analyst’s recommendation to buy, hold, or sell. The analyst also will have a target price that tells investors where they expect the stock to be in a year’s time.

What Does an Equity Research Analyst Do?

Equity research analysts exist on both the buy-side and the sell-side of the financial services market. Although these roles differ, both buy-side and sell-side analysts produce reports, projections, and recommendations for specific companies and stocks.

An equity research analyst specializes in a group of companies in a particular industry or country to develop high-level expertise and produce accurate projects and recommendations. Since ER analysts generally focus on a small set of stocks (5-20), they become specialists in those specific companies and industries that they evaluate or follow. These analysts monitor market data and news reports and speak to contacts within the companies/industries they study to update their research daily.

Analysts need to comprehend everything about their ‘coverage’ to give investment endorsements. Equity research analysts must be conversant with the business regulations and regime policies within the country to decide how it will affect the market environment and business in general. The more you understand the industries in detail, the easier it will be for you to decipher market dynamics.

One prevalent aspect of an equity research analyst’s job is building and maintaining valuable relationships with corporate leaders, clients, and peers. Equity research is largely about an analyst’s ability to service clients and provide insightful ideas that positively influence their investing strategy.

EQUITY RESEARCH ANALYSTS:

  • Analyze stocks to help portfolio managers make better-informed investment decisions.
  • Analyze a stock against market activity to predict a stock’s outlook.
  • Develop investment models and provide trading strategies.
  • Provide expertise on markets and industries based on their competitive analysis, business analysis, and market research.
  • Use data to model and measure the financial risk associated with particular investment decisions.
  • Understand the details of various markets to compare a company’s and sector’s stock

Buy-Side vs. Sell-Side Analysts

Although the roles of buy-side and sell-side analysts do overlap in some respects, the purpose of their research differs.

How Do Corporates Currently Access Equity Research?

If you were to Google “equity research reports,” you would not get access to equity research, earnings call transcripts or trade journals. You would, however, discover an unmanageable amount of noise to sift through.

Accessing equity research reports is highly dependent on relationships and entitlements, particularly for corporate teams. Unlike financial firms and investor relations teams, who can access equity research by procuring the right entitlements, corporate teams have a much harder time finding and purchasing high-quality equity research.

If you were to search online for equity research, for example, you would be presented with sub-par options such as:

sample equity research report

Some websites allow you to search for research reports on companies or by firms. Some of the reports are free, but you must pay for most of them. Prices range from just $15 to thousands of dollars.

sample equity research report

If you want just the bottom-line recommendations from analysts, many sites summarize the data. Nearly all the websites that provide stock quotes also compile analyst recommendations, however, you will only get the big picture and not any of the detailed analysis.

sample equity research report

Some independent research providers sell their reports directly to investors. These reports typically include an overview of what a stock’s price could be, plus an analysis of the company’s earnings. These reports often cost less than $100 but can be more.

The majority of equity research is completely unsearchable, which is why AlphaSense’s Wall Street Insights is changing the game for corporations globally. Now, with WSI, corporations can leverage this high-quality research to augment their understanding of specific companies and industries; plus, AlphaSense’s corporate clients can now conduct more meaningful analysis and make more data-driven decisions.

Real-Time Research : Real-Time research is available to eligible users (based on an entitlement) immediately upon publication by the broker. Financial Services users with entitlements are the primary consumers of real-time research, while some Corporate professionals are also eligible. Payment for real-time research is made directly from clients to brokers through trading commissions or hard dollar agreements.

Aftermarket Research : Aftermarket research is a collection of many of the same documents as the real-time collection, but it is available after a zero to fifteen-day delay. Investment bankers, consultants, and corporate users are the primary consumers of Aftermarket research.

What is Wall Street Insights?

Wall Street Insights is the first and only equity research collection purpose-built for the corporate market, providing corporations unprecedented access to a deep pool of equity research reports from thousands of expert analysts.

Through partnerships with Morgan Stanley, Bank of America, Barclays, Bernstein, Bernstein Autonomous, Cowen, Deutsche Bank, Evercore ISI, HSBC, and others, corporate professionals can now access the world’s most revered equity research, indexed and searchable in the AlphaSense platform.

From macro market trends and industry analyses to company deep-dives, the Wall Street Insights content collection provides corporate professionals with a 360-degree view of every market. With the valuable expertise of thousands of analysts on your side, corporate teams can quickly compare insights, validate internal assumptions, and generate new ideas to guide critical business decisions and strategies.

In terms of search and accessibility, Wall Street Insights is the first of its kind. Not only does AlphaSense offer hard-to-find equity research reports, but we also provide a robust and seamless search experience.

sample equity research report

What Research Do You Get Access to with WSI?

Get access to the world’s leading equity research with Wall Street Insights. Download the e-book to learn more about equity research from Morgan Stanley, Barclays, Bernstein, Deutsche Bank, and more.

“We are delighted to partner with AlphaSense to expand access to Morgan Stanley’s global research platform,” says Simon Bound, Global Head of Research at Morgan Stanley. We have over 600 publishing analysts covering companies, industries, commodities, and macroeconomic developments across more than 50 countries. Morgan Stanley will bring corporates a unique perspective from our best in class analysts, a global platform, and a collaborative culture that enables us to unravel the most complex market and industry trends.”

How Can Companies Leverage Equity Research?

Discover how the world’s most innovative companies leverage Wall Street Insights to make critical business decisions every day. Download the e-book to read real case studies from a Corporate Development team and a Corporate Strategy team.

“AlphaSense’s corporate users are typically Corporate Strategy, Corporate Development, and Investor Relations professionals. Today, thousands of enterprises rely on equity research to power data-driven decision making. These teams leverage equity research reports to:”

  • Create investment ideas
  • Monitor peers in real-time (and discover what equity research is being produced about them)
  • Model and evaluate companies (for M&A or general benchmarking)
  • Dive deep into customers, partners, and prospects
  • Get up-to-speed quickly on specific industry trends
  • Prepare for earnings season

Ready to explore the world’s leading equity research

A Student’s Guide to Writing A Buy-Side Equity Research Report

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Marina Chang

A Student’s Guide to Writing A Buy-Side Equity Research Report

A career in finance can take on many different forms — from investment banking to equity research. Equity researchers conduct detailed analyses in order to offer well-supported investment recommendations. Their analyses are then compiled into what is referred to as an equity research report. These reports differ on the sell-side and buy-side, but they do have some overlaps. This guide will break down the key components and formats to help you successfully craft your own equity research report.

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What is an equity research report? What is the purpose of a research report?

An equity research report is a document prepared by an analyst that gives an overview of a business, including the industry it operates in, its management team, its financial performance, risks, and its target price. The purpose of a research report is to provide a recommendation on whether investors should buy, hold, or sell shares of a public company.

What’s the difference between a buy-side and sell-side equity research report?

Sell-side reports are the most common type of equity research report. They are typically produced by investment banks for their clients to help guide investment decisions. Sell-side analysts issue the often-heard recommendations of “buy,” “hold,” “neutral,” or “sell” to help clients with their investment decisions. This is favorable for the brokerage firm as each time a client decides to trade the brokerage firm gets a commission on the transaction.

Buy-side reports are internal reports, produced for the bank itself, and are guided by differing perspectives and motivations. Buy-side analysts determine how promising an investment seems and how well it fits with the fund’s investment strategy. These recommendations are made exclusively for the benefit of the fund that employs them and are not available to anyone outside the fund.

What information should be included within your equity research report?

  • Recommendation  – Typically to buy, sell, or hold shares in the company. This section also usually includes a target price (i.e., $47.00 in the next 12 months).
  • Company Update  – New releases, quarterly or annual results, major contracts, management changes, or any other recent or important information about the company.
  • Investment Thesis  – A summary of why the analyst believes the stock will over or underperform and what will cause it to reach the share price target included in the recommendation. This is probably the most interesting part of the report.
  • Financial Information & Valuation  – A forecast of the company’s income statement, balance sheet, cash flow, and valuation. This section is often an output from a financial model built in Excel.
  • Risk & Disclaimers  – An overview of the risks associated with investing in the stock. This is usually a laundry list of all conceivable risks, thus making it feel like a legal disclaimer. The reports also have extensive disclaimers in addition to the risk section.

What information is needed for the industry pages?

  • Competitive Rivalry  – This looks at the number and strength of competitors. How many rivals does the company have? Who are they, and how does the quality of their products and services compare?
  • Supplier Power  – This is determined by how easy it is for suppliers to increase their prices. How many potential suppliers does the company have? How unique is the product or service that it provides, and how expensive would it be to switch from one supplier to another?
  • Buyer Power  – Here, you ask how easy it is for buyers to drive prices down. How many buyers are there, and how big are their orders? How much would it cost them to switch from the company’s products and services to those of a rival? Are buyers strong enough to dictate terms?
  • Threat of Substitution  – This refers to the likelihood of customers finding a different way to do what the company offers.
  • Threat of New Entry  – The company’s position can be affected by how easy it is for a new company to enter the industry. How much would it cost, and how tightly is the industry regulated?

How to create and forecast a financial model.

  • Gather the company’s most recent 10-K and 10-Q SEC filings.
  • For all three financial statements, copy and paste the line items that can be forecasted.
  • Make income statement projections based on margins as a percentage of revenue.
  • Create a depreciation schedule to account for the reduction of PP&E and intangible assets over time.
  • Calculate working capital assumptions.
  • Forecast current assets and liabilities on the balance sheet.
  • Adjust net change in cash and cash equivalents (CCE) with the cash flow statement.
  • Reconcile the cash flow statement with the balance sheet.
  • Compute the dividend payout ratio if the company offers a dividend.
  • Create the shares repurchase schedule if the company has a share buyback program.
  • Construct the debt schedule.
  • Calculate interest income and interest expense from the debt schedule.
  • Run multiple scenarios – Wall Street Case, Bear Case, Bull Case.
  • Sanity check your assumptions.

How many pages should your equity research report contain?

An equity research report should not be more than 10 to 15 pages long. Aim to be both concise and cohesive.

What kind of disclaimer should be included?

It is important for the report to have certain disclaimers to show that the analyst writing the report isn’t biased. Some typical disclaimers are as follows: 

  • Every ER report entirely reflects the views and personal opinions of the analyst as on the date of publication.
  • The equity research analyst does not have an interest in the shares of the company.
  • Compensation of the analyst is not linked directly to any specific research recommendations contained in the report.
  • Financial analysts or equity research analysts working in brokerage firms or sell-side analysts write equity research reports.

With all these points in mind, you are now ready to write your own equity research report. Select a public company, use this guide as a reference, and see what results from your analysis. Congratulations in advance on completing your research report!

Romero Mentoring’s Analyst Prep Program

sample equity research report

In just 15-weeks, you can become a world-class finance professional. The Romero Mentoring Analyst Prep Program is an all-inclusive internship, mentorship, and training experience like no other. Learn the in-depth principles of finance and apply what you learn through an extensive internship led by a finance professional with over 12 years of experience.  Learn more here.

The  Analyst Prep Program  teaches the technical and practical skills that investment banks, hedge funds, and private equity & consulting firms look for in a candidate. Students begin with little to no technical skills and develop into fully prepared professionals who can perform as first-year analysts from day one.

About Romero Mentoring

Since 2016, Romero Mentoring investment banking training programs have been delivering career mentoring to job seekers, professionals, and college students pursuing careers in finance. We’ve helped over 400 students start their careers on Wall Street through our Analyst Prep and Associate Investment Banking Training Programs. Our graduates work at top-bulge bracket banks and consulting firms, including Goldman Sachs, JP Morgan, McKinsey, and many more.

References:

  • https://www.financewalk.com/equity-research-report/
  • https://corporatefinanceinstitute.com/resources/knowledge/valuation/equity-research-report/#:~:text=What%20is%20an%20Equity%20Research,distributes%20that%20research%20to%20clients.
  • https://quickbooks.intuit.com/r/marketing/market-research-tips-how-to-conduct-an-industry-analysis/

About the Author

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Marina Chang is a business student at New York University pursuing a double concentration in Finance and Data Science. She is currently an Investment Research Intern at Romero Capital. Marina is an Analyst at NYU's Smart Woman Securities, where she worked with a team of 5 to compete in a stock pitch. She is also a Staff Consultant at 180 Degrees Consulting. The organization provides affordable advising services for non-profits and social enterprises. Marina was a mentee of the Analyst Prep Program.

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Top 7 Equity Report Templates with Samples And Examples

Top 7 Equity Report Templates with Samples And Examples

Kavesh Malhotra

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"In investing, what is comfortable is rarely profitable." - Robert Arnott,  American businessman and investor.

Equity consulting reports  are pivotal in distilling complex financial data into understandable narratives. They guide investors, offering a comprehensive view of a company's financial health,  stock analysis , market position, and growth prospects. The ability to make informed decisions in the volatile realm of equities is not just advantageous; it's a necessity. In this blog, embark on a transformative journey as we delve into a rich array of templates poised to revolutionize your equity report projects.

Alongside, elevate your equity research presentations with SlideTeam's curated selection of  Equity Research PowerPoint Templates , ensuring clarity and engagement.

Unlocking Financial Wisdom: The Power of Equity Reports Templates

The pain point lies in deciphering intricate financial details. The benefit is having ready-made templates that demystify complex financial data, presenting it in a visually appealing and easily digestible format. Furthermore, these templates aren't just ready-made; they're dynamic canvases, allowing you to mold your narrative with 100% flexibility.

Template 1: Company Stock Analysis and Equity Research Report PowerPoint Presentation 

Dive into the intricate details of a company's stock performance and financial health with this extensive deck. It offers an overview of an  equity research report  and helps investors make buy or sell decisions. It includes an analyst summary, industry analysis,  company stock analysis , company highlights, financial ratios, valuation methods, risk factors, and ratings. The report ends with an overview of the equity team and an overall analyst rating. Uncover the intricacies of a company's stock performance and gain insights for strategic investment decisions. Download this presentation that is ideal for in-depth equity research and comprehensive analysis.

Company Stock Analysis and Equity Research Report

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Template 2: Equity Consulting Report PowerPoint Presentation Slides

This presentation is a device for financial analysts to compile investment research insights. It includes data visualization tools like pie charts and tabular formats to present information about the target company's financial health. The presentation integrates state-of-the-art design elements. You can use it to create a financial ratio analysis, industry overview, and risk assessment. The  equity consulting report  even helps you to identify and portray the intensity of each type of risk. Navigate through strategic consulting with clarity and precision. Download this comprehensive guide for equity consultants, offering insights to support informed financial recommendations.

Equity Consulting Report

Template 3: Equity Tax Proposal Report Sample Example Document

Simplify the complexities of equity taxes with this deck. Our  Equity Tax Proposal  outlines equity tax and filing guidelines, providing an overview of wealth tax services with crucial goals and deliverables. It presents an action plan for seeking wealth tax services, including client goals, a roadmap, and monitoring of the wealth portfolio. The proposal further showcases various company services to fulfill client needs, including tax planning, cash flow analysis, and advisory services, along with an investment plan highlighting effective costs and tax. It also briefly illustrates the company's background, mission, core values, milestones, and achievements. Navigate the complex landscape of equity taxes by downloading this well-structured proposal, ensuring compliance and financial efficiency.

Equity Tax Proposal

Template 4: Annual Shareholder Equity Report for Construction Company

Specifically designed for construction companies, this slide provides a detailed annual snapshot of shareholder equity, aiding in project financing decisions. It presents valuable information regarding the equity-related activity of the company during a specific reporting period. Its key components include

  • Common stock, which represents the ownership of the company's shares by its shareholders;
  • Treasury stock, which refers to shares that have been repurchased by the company and are currently held in its treasury and
  • Retained earnings represent the portion of the company's profits retained for future use and are not distributed as dividends to shareholders.

Download this slide, a must-have for financial planning and project financing.

Annual shareholder equity report for construction company

Template 5: Financial US Equity Market Ownership Report Analysis

This informative layout will give a deeper understanding of the equity market landscape in the United States. A visually compelling pie chart showcases the diverse ownership of the USA equity market, encompassing households, mutual funds, and foreign investors. This visually appealing slide allows you to delve into market trends, investor behavior, and ownership patterns to gain valuable insights. Don't hesitate to download it now and enhance your market knowledge.

Financial US Equity Market Ownership Report Analysis

Template 6: Equity Research Report Overview 

This overview slide of the equity research report sets the tone for the detailed analysis and strategic recommendations that follow. It presents crucial statistics and metrics related to the target company, giving readers an overview of its current position and performance. The slide also briefly introduces the equity consulting report, outlining its purpose, scope, and critical focus areas. Download this slide, which is perfect for initiating comprehensive research projects and building insightful reports.

Equity Research Report Overview

Template 7: One-Page Consolidated Statements of Stockholders Equity Presentation Report

Are you struggling to present much financial data in a clear and easy-to-understand format? Look no further than our one-page infographic report. Our report provides a comprehensive analysis of your company's statement of stockholders' equity and a detailed evaluation of your firm's profit and loss. This visually appealing and concise report lets you easily communicate your financial data to stakeholders and make informed business decisions. Download this slide, which is ideal for quick reviews, executive summaries, and presenting consolidated statements of stockholders' equity.

Consolidated Statements of Stockholders’ Equity

Template 8: One-Pager Global Equity Fact Sheet Presentation 

Gain a global perspective on equity with this fact sheet infographic. It includes information about the investment approach, funds overview, key benefits, and top equity holdings of the funds. Further, this equity fund fact sheet showcases fund returns, a risk meter, and geographic asset diversification. Present vital figures and facts in a visually compelling one-page format for impactful communication. Download it right away! Furthermore, dive into stock research with our  stock research templates , offering comprehensive formats for insightful and impactful stock reports.

One Pager Global Equity Fact Sheet

Template 9: One Pager Core Equity Fund Fact Sheet Presentation Report 

Tailored for equity funds, this fact sheet template offers a succinct overview of fund performance, key metrics, and investment highlights. This  equity fund fact sheet  includes fund benchmark, managers, launch date, and base currency information. It also covers the details of the investment process, funds performance, and risk meter, along with the investment philosophy. Perfect for investor communication and reporting, Download this infographic without further delay.

One Pager Core Equity Fund Fact Sheet

Conclusion: Your Financial Odyssey Starts Here!

In the ever-evolving landscape of finance, where every decision counts, the role of  equity research reports  cannot be overstated. To gauge the pulse of equity reports, surveys indicate a growing reliance on these documents for investment decisions. Seasoned and novice investors increasingly seek presentations that can provide a structured  company stock analysis . The above templates not only simplify the complexity of financial data but empower investors to make informed choices. Likewise, uncover a collection of versatile  research report templates  designed to enhance your reporting capabilities.

The journey toward financial success begins with the right tools, and these equity report templates stand as the compass to navigate the intricate waters of the equity market.

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21+ SAMPLE Equity Research Report in PDF | Google Docs | Apple Pages | MS Word

equity research report

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Equity Research Report

Equity research vs investment banking, 1. financial analysis report template, 2. financial analysis template, 3. business research report template, 4. company financial analysis template, 5. financial report template, 6. free financial report template, 7. free research report cover page template, 8. free financial management report template, 9. free company expense report template, 10. free finance internal audit report template, 11. equity research report, what makes a good analyst.

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What’s in an Equity Research Report?

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stockholder research review cover

Even though you can lightly seek real equity research reports via the magical tool well-known as “Google,” we’ve continued to get questions on this topic.

Whenever I see the same question over furthermore over again, you know what I do: I hit my head in repeatedly and contemplate jumping off a building…

…and then I write an article at answered the question.

To understand into equity research report, her must understand get goes into a  stock pitch first.

One idea is similar, but in ER report is a “watered-down” version of ampere stock pitch.

But banks have few very solid good for releasing total study reports:

Why Do Equity Research Reports Matter?

You might remember from previous articles that equity research staff do not spend that many time writing these reports .

Most of to time is spent speaking with administration teams and institutional investors the sharing their opinions set sectors and companies.

Although, equity research reports are still important because:

  • You take still spend any point make the required modeling work (~15%) and writing the reports (~20%).
  • You kraft have to write one research report as part of the interview processes.

For real, if you apply to an company how role or an equity research internship , more into an off-cycle process, you might be questions to draft a short report on a business.

And then in roles outer of ER, you needs to know how in dolmetscherin reports quickly and extracts the key information.

Equity Research Reports: Myth vs. Reality

If you want to understand equities doing reports, you have to appreciate first why banks publish theirs: toward earn higher commissions from trading activity.

A bank wants to encourage institutional investors to buy continue shared of the companies a covers.

Doing so created moreover trading tape and higher commissions for the bank.

This is why you rarely, if ever, see “Sell” ratings, and why “Hold” ratings be broad save common than “Buy” ratings.

Different Types of Equity Research Reports

One last point before taking into the tutorial: There be many different types of research reports.

“Initiating Coverage” reports tend into be long – 50-100 pages or more – and must tons of industry research and data.

“Sector Reports” on entire industries are and very long. And there are other types, where you can read about here .

In this tutorial, we’re focusing on the “Company Update” or “Company Note”-type berichtet, who are that majority common ones.

The Full Tutorial, Video, and Sample Equity How Reports

For our full walk-through of equity search reports, please discern who video below:

Table of Contents:

  • 1:43: Part 1: Total Pitches vs. General Research Reports
  • 6:00: Part 2: The 4 Main Differences in Research Reports
  • 12:46: Part 3: Sample Reports and the Typical Sections
  • 20:53: Recap and Summary

You can get that reports and documents referenced in the video here:

  • Equity Research View – Jazz Pharmaceutics [JAZZ] – OUTPERFORM [BUY] Recommendation [PDF]
  • Equity Research Report – Shawbrook [SHAW] – STOP [HOLD] Recommendation [PDF]
  • Equity Research Reports vs. Stock Pits – Slides [PDF]

If to want the text version instead, keep getting:

Watered-Down Bearing Pitches

You require reckon of equity research reports like “watered-down stocks pitches.”

If you’ve forgotten, ampere hedge fund or asset betriebswirtschaft stock pitch ( sample stock pitch here ) has the following components:

  • Part 1: Recommended
  • Part 2: Corporation Background
  • Part 3: Participation Thesis
  • Part 4: Catalysts
  • Part 5: Valuation
  • Section 6: Investment Risks and How to Mitigate Diehards
  • Part 7: The Worst-Case Scenario and What to Avoid It

Included a stock pitch, you’ll spend most out your time and energy on the Catalysts, Valuation, and Investment Risks because you want to express a VERY different view of the company .

With example, the company’s stock price is $100, though you believe it’s worth all $50 because it’s about to report earnings 80% delete than expectations. Room Street Refuge

Therefore, you recommend shorting the stock. I also endorse purchasing call options at an exercise price about $125 to limit your losses to 25% if the stock moves int an opposite direction.

In an equity research story, you’ll standing express a click of the company that’s different from of consensus, but your view won’t be dramatically different.

You’ll spend more time on the Company Background and Valuation sections, and far less zeitraum and space off the Catalysts and Risk Agents. Real you won’t even write ampere Worst-Case Scenario section. Equity Research Report

If a company seems over-valued by 50%, a research analyst would probably write an “Hold” referral, what that there’s “uncertainty around several customers,” and claim that this company’s actual market value is appropriate. An equity research report is a document prepared of an financial that provides a recommendation for investors to buy, hold, or sell shares of a company.

Oh, and by and way, one risky factor is that the your kraft reports lower-than-expected earnings.

The Four Main Differences in Equity Research Reports

To main differences are as follows:

1) There’s More Emphasis off Recent Results and Announcements

For example, how does a latest our proclamation, clinicians test result, or earnings report shock the company?

You’ll almost always see recent recent and updates upon the first page a a research report:

Equity Research Report Cover Page

That factors allowed player a role into hedge fund stock pitches as well, but more so in short recommendations whereas timing is more important there.

2) Far-Outside-the-Mainstream Views Are Less Common

One comical example to these trend is how all 15 equity research analysts covering Enron grades i a “buy” right before it crashed :

Your Research Account on Enron With Buy Recommendation

Sell-side analysts been far less likely for point outgoing that the imperials has no clothes than buy-side attorney.

3) Research Reports Give “Target Prices” Rather Than Focus Price Ranges

For example, the group is trading at $50.00 right now, but we expect its price to elevate to right $75.00 in the next twelve months.

This conceive is total laughably since valuation is always about to amount of possible outcomes, not a specific outcome.

Despite horrendously low accuracy , this practice continues.

To be fair, many associate do give target prices in different cases, which is certain improvement:

Equity Choose Create with Target Share Value Range

4) The Investment Thesis, Catalysts, and Peril Factors Represent “Looser”

These sections tend to be “afterthoughts” in bulk books.

For example, the bank might give a few reasons why it expects the company’s share price to rise: the company will capture more market share than expected, it will be able on increase its product prices see rapidly than expected, and a competitor is about to go bankrupt.

However, one sell-side analyst will cannot tie these factors at specific share-price impacts as a buy-side analyst would.

Similarly, the report might tell calibration and investment risks, when go won’t remain a link to one specific valuation impact from each factor.

So the typisches stock pitch log (“We think there’s a 50% chance for gaining 80% and a 50% chance of losing 20%”) won’t be spelled out extlicit:

equity-research-report-04

Your Sample Equity Doing Reports

To illustrate this concepts, I’m sharing two equity research reports from his financial modeling courses :

  • Equity Research Report – Jazz Pharmaceuticals [JAZZ] – OUTPERFORM [BUY] Advice [PDF]
  • Total Research Report – Shawbrook [SHAW] – NEUTRAL [HOLD] Recommendation [PDF]

The first one is from that appraisal case study in our Financial Modeling Fertigkeiten course , the an minute one is from the main case study in we Bank Scale course .

Person starter by creating traditional HF/AM stock pitches and valuations and then made ours views weaker in the research reporting.

And Typical Parts of an Equity Research Report

As let’s briefly anreisen through the schiff sections of these reports, using the two examples beyond:

Side 1: Update, Rating, Price Goal, and Recent Results

The first page of an “Update” report expresses one bank’s recommendation (Buy, Hold, or Sell, sometimes with slightly different terminology), and confers recent updates on and company. Financial modeling is one concerning the elemental duties in sell side equity research. Associates in one early platforms of their careers likely spend at least a third, if not half of their time functioning on models – whether building, upgrade or improving them.

For example, in equally these reports we reference recent earnings results by the companies both expectations for the next monetary year:

ERR Buy Recommendation

Our also give ampere “target price,” clarify where it comes from, and give our estimates for the company’s key finance metrics.

We mention catalysts in all gutachten, but we don’t connect get to a specific valuation impacting.

A problem with providing a specific “target price” is that it must be based on specific composites and precise assumptions in a DCF or DDM.

So with Jazz, are explain that the $170.00 target is based on 20.7x and 15.3x EV/EBITDA multiples for the comps, and a discount rate of 8.07% and Terminal FCF plant rate regarding 0.3% in the DCF. Sample Research

Next: Operator and Financial Summary

Next, you’ll please a section are lots of graphs and charts detailing the company’s financial performance, market share, and important metrics and ratios.

Used a pharmaceutical our like Jazz, you might see revenue by product, pricing and # of patients per product per year, and EBITDA width.

Available a commercial slope like Shawbrook, you might see loan growth, interest rates, interest income and net income, additionally regulatory wealth figures such as the Common Equity Tier 1 (CET 1) and Tangible Common Equity (TCE) ratios:

equity-research-report-06

This section of the report explains how the analyst or equity research associate forecast the company’s performance and came up with the numbers utilised in the evaluating.

The valuation section is to one that’s most similar is a explore report and a stock pitch.

Inside both fields, yours explaining how you arrived at the company’s hidden value, which usually involves pasting in a DCF or DDM analysis and same companies also transactions.

The methodologies are one same, but the assumptions might differ substantially.

In research, you’re other more likely at point in specific multiples, such as the 75 nth percentile EV/EBITDA multiple, and explain why they are the most meaningful individuals.

For example, you might contend that since the company’s growth rates and margins exceed that medians of the set, e deserves until be wertvolle at the 75 th centile multiples rather than who zentralwert multiples:

equity-research-report-07

Investment Proposition, Automotive, and Hazard

This section shall short, the it is more of any afterthought than anything others.

We do give reasons on enigma these companies can be mis-priced, and this reasoning isn’t that detailed.

For case, in the Shawbrook report we current that the U.K. mortgage market magisch go depressed or that regulatory edit might reduce the market size real the company’s market share:

Equity Research Story Investment Risks

Those are legitimate catalysts, but the report doesn’t explain their share-price impact in to same way that a bearings pitch would.

Finally, banks present Investment Risks mostly so handful can say, “Well, we warned you it were risks and that our recommendation might be wrong.”

By count, buy-side analysts present Your Risks so they can say, “There exists a legitimate chance we could lose 50% – let’s fudge against that risk with options or other stake as that our mutual does not collapse .”

How Diese Reports Both Differ from the Corresponding Stocking Camping

The Jazz equity study report corresponding to a “Long” pitch that’s much tougher:

  • We estimate its intrinsic value as $180 – $220 / shared , up from $170 in and report.
  • We estimate the per-share impact of each catalyst: price increases hinzusetzen 15% to the shared value, more patients from marketing efforts add 10%, the later-than-expected generics competition adds 15%. Financial Modeling With Equity Exploration: A Step-by-Step Guide to Earnings Modeling and Stock Valuation for Investment Analysis [Moschella CFA CPA, John] the Amazon.com. *FREE* shipping on qualifying offers. Economic Modeling For Shareholders Study: A Step-by-Step Conduct toward Earnings Modeling and Stock ...
  • We also estimate the per-share how from the risk factors and infer that in to worst case , the company’s share price kann decline from $130 to $75-$80. But in all probabilities, even if we’re wrong, this company a simply valued appropriately the $130.
  • Real and we explain what toward hedge facing these risks with put options.

The same differences apply to the Shawbrook research report contra. the stock pitch, but the stock pitch there is a “Short” recommendation where we claim that the company shall overvalued by 30-50%.

And this sums up the differs perfectly: A Short recommendation with 30-50% downside in a stock golf spinning into a “Hold” testimonial include broad similar upside and downside in a sell-side research report.

What’s are an Stockholders Research Report?

I’ve been harsh on equity research hierher, but EGO don’t want to disparage it too much.

There are many positives: You accomplish get more creativity easier in IB, it might be better for hedge fund other asset management exits, and it’s more fun to follow companies than to crushing through grunt work the deals.

But no matter how you slice it, most equity research recent are watered-down stock pitches.

So, create sure you understand an “strong stuff” first before you downgrade – even with your long-term goal a equity research.

sample equity research report

About the Novelist

Brian DeChesare is the Founder of Mergers & Infquisition and Breaking In Fence Street . Included his saver time, he enjoys lifting weights, running, traveling, obsessively watching VIDEO shows, real conquest Sauron.

Free Excluded Report: 57-page travel with the action draft you need to break into participation banking - how in tell my story, network, craft a winning resume, press dominate your interviews

Read below or Add a comment

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Hi Robert, what softwares are available to publish Explore Reports?

sample equity research report

We use Word templates. Some large banks have specialized/custom programs, but not sure method common they are.

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Has it possible if you can sendung me a template in word of an equity report? It will help the graduate stock management fund a lot at Umass Boston.

We only have PDF versions for these, not Word should be able to open any PDF reasonably well.

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Do you and provide a pre constructed version of and ER in word?

We have editable examples of equity research reports in Speak, but our generally single share PDF variations on this site.

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Hey Bryan Can you kindly help me with coverage initiated reports on balm company. I may not find their the the net. I need to them to get equity conduct experience, after who only ME intention be able to get into the pitch. I searched but reports could non been found even for an price. Thanks Learn concerning one standard components of an equity research report the how they are used by both the buy next and sell side.

We have an example of an oil & gas stock pitch on this site… what a search…

https://gilltires.net/oil-gas-stock-pitch/

Beyond that, pardon, we cannot look for reports and following percentage them with her or we’d be overwhelmed on requests in make that every day.

No worries. Thanks!

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Hi! Brian! Do united know how your bankers design and layout an equity research? the software they make. like MILLIMETER Word, Adobe Indesign button something…? And how in create press display one? Thanks Equity research professionals are answerable for producing analysis, recommendations, and gutachten for invest opportunities which investment banks, institutions,

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what can I get free capital research report? I am a China student and now study in Sydney. Is aforementioned Morning Star one good resource for research report? What is Equity Research? Equity Research primarily means analyzing of company's financials, performing ratio analysis, forecaster the financials in

Get a TD Ameritrade toward gateway free berichten there for certain companies.

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How do you view the ER diligence since one business commission has been down 50% since 2007. And there are new in next regulation governing the E reports have to explicitly priced and funds need to pay in the report explicity rather than as a service comes free with investment? Financial Modeling For Equity Research: A Step-by-Step Lead to Earnings Modeling and Stock Valuation available Investment Analysis

In addition the total S&T environment is becoming powerful automated.

People have been predicting the death of equity research for over a decade, yet it’s still here. It may not live around in 100 period, though it will still be around on different 10 years, though she wants been smaller and without relevant. Equity Research Account Example

Yes, matters are becoming more automated, but this actual job of an net explore analyst instead associate hasn’t changed dramatically. A machine can’t spoken with investors to assess their sentiment on a society – simply humans can do that.

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sample equity research report

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FREE 10+ Equity Research Report Samples in MS Excel | PDF | MS Word

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As an equity research analyst, one of the important tasks you need to accomplish is obtaining a clear understanding about the industry or industries several companies are in, some particular things companies perform, and several ways they generate money. In order to fully understand their strategies, financials, and management, you need to make a well-detailed research and create an effective equity research report. In this article, we are glad to help you in writing the best equity research reports as we provide an informative guide and downloadable free equity research reports to guide you in your research work. Keep on reading!

Equity Research Report

Free 10+ equity research report samples, 1. equity research report template, 2. independent equity research report, 3. sample equity research report template, 4. equity research analysis report, 5. sample securities equity research report, 6. equity research and valuation report, 7. independent equity research report format, 8. equity research report in excel template, 9. sample equity research report, 10. company equity research report sample, 11. call center equity research report, what is an equity research report, how to write an equity research report, 1. identify the vision of the company through their management, 2. include the right recommendation, target price, and investment rationale, 3. demonstrate price chart, business model, and key ratio analysis, 4. explain your reason for recommendation, how is equity research done, what is investment research, what is the main purpose of equity research, how do you research investments.

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An equity research report is a beneficial document that contains the well-detailed financial analysis and recommendations concerning investment banking, sales, and trading. It gives essential details about a particular company’s target price and recommendation, compelling headline, stock vs. index graph, stock data, investment report summary or overview, business description, valuation, investment risks, and many more. Some common types of equity research reports are initiation reports, sector reports, economy reports, and quarterly/annual results update reports.

When writing an equity research report , you need to know the basic information of the company such as its accounting, products and services, management, selling practices and more. Be aware about the industry and the market’s perspective about the company. Also, take note of specific factors that your clients want when it comes to investment. 

Below are some easy-to-follow tips  that indicate how to design and write an equity research report: 

The first thing you need to do in your equity analysis report is you need to work alongside the management of your target company to identify their vision. So, you should be able to interact well with the management team or you may also meet with the senior management of the company under your coverage. Attend some of their conferences and prepare questions when you conduct an interview for the management.

The second step is gathering all essential puzzle pieces together to create the bigger picture. Simply, include your perspective of the industry, company ’s products and services, financial performance, management, and valuation. Then, decide the right recommendation or rating for the stock. Mention the target price and investment rationale.

After creating the bigger picture of the company’s financial analysis , you need to demonstrate a price shart of the company’s stock, showing last year’s share price movement. Plus, include a thorough analysis of the company’s business model and forecast its performance in the upcoming years. Additionally, a key ratio analysis of the company is necessary in your report.

To wrap up your  equity research report , think carefully in writing your explanation concerning your reason for recommendation or rating of the company you’re covering. 

Equity research is done by evaluating the company’s financial statements, conducting ratio analysis, predicting the financials, and exploring various scenarios with the aim of creating a buy/sell stock investment recommendation.                                                                                                              

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An investment research is a kind of research that provides an analysis of the performance of various kinds of financial tools such as mutual funds, stocks, debentures, bonds and many more. This is significant for the investor so that he or she can view the real performance of his or her company. Also, it helps in determining the company’s future performance for price movements. 

The main purpose of equity research is providing comprehensive financial analysis and recommendations to suitable investors, whether they purchase, hold, or sell a certain investment.

Gather your stock research materials so that you can evaluate the financial statements of your company. Then, carefully examine them. After that, you need to perform qualitative research and put your research into context.

Therefore, writing an equity research report is a worthwhile step in analyzing the financial performance of a company especially when it comes to stock investments. The book “ How to Get an Equity Research Analyst Job ” explained that when you are an equity analyst on either the buy or sell side, you are an intermediary in the capital raising process of the global financial markets. The work you do is beneficial in creating a value on publicly traded assets. Here are some of our downloadable and printable research report samples available in different kinds of formats. Simply click the report templates in this article and start downloading now!

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An equity research report is the document prepared by an analyst which provides a recommendation on whether investors should purchase hold, or sell shares of public company. Additionally, it provides an overview of the business, the industry it operates in, the management team, its financial performance risks, and the target price. The equity research is the study of the equities or stocks for the investment purpose. You can also see more on  Research Report in Google Docs Templates.

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Step 1: Knowing the company well

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Need Equity Research Report Sample

shanky's picture

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Hey all, I was talking to a equity researcher sell side( C.L King and Associate) . He suggested that the best way to impress ER analyst is to build a pitchbook/ Equity research report and present it along with cover letter. I would appreciate if if somebody could share any sample report and suggest some industries/companies that I should follow and build the report for.

Thanks in advance.

Fantastic - Certified Professional

You can usually download free equity research reports from Credit Suisse if you make an account on TDAmeritrade (which is free to register). Works for me.

astfin-juki - Certified Professional

Do NOT bring along your "research report" to an interview. You'll get yourself screwed over - Limited upside, extremely high downside (overeager, report getting ripped apart etc.) Best way to impress your interviewer? Find out more about his sector and try to provide differentiated views/info.

Qureshi's picture

just google it.. you should be able to find em ... as for the downsides mentioned by astfin-juki it is unlikely that anyone will grill you for your making a report or a paper portfolio or preparing a stock pitch because everyone knows there is no way you can do this stuff better than a professional.. they will ask about your analysis as in the reasons behind it, to see "why" you have come to the conclusions you have ... the worst result will be that they will not even pay any attention to your reports ... if they do grill you or put you on the spot it will be to test your nerves to see how you handle criticism, angry bosses, angry clients and pressure in general ... just don't let your brain go dead with a heavy feeling on the front/top part of your brain,that is the cortisol and other stress hormones taking over (too much of them and the brain slows down), sleep well, hydrate and take optimal amounts of caffeine ... caffeine consumption without sufficient water will slow the brain down since caffeine dehydrates the body and also do Not eat too many sugary foods either, leads to pretty bad crashes within 10 to 20 minutes ... also try BIWS you should be set for interviews and making models, reports, etc

ar169 - Certified Professional

Sample Professional Equity Research Report ( Originally Posted: 08/06/2013 )

So I wanted to look through an equity research report just to see what kind of things I might be asked about in an ER interview or something I can use as a model to try to make one myself.

P.S. I was not a finance undergrad so I am not very heavily experienced in this. When I asked people about this, some told me to focus on financial modelling whereas others told me to do things like Porter's five force analysis and technical analysis .

I am not really sure which direction is the 'right' one so I appreciate any help.

FVC-DOR - Certified Professional

I'm willing to share a research sample with you. Send me a private message with your email address. As for what sectors/companies to cover, what do you know best? Research what you understand!

LongandShortofit - Certified Professional

modeling is definitely more important than technicals. I think a lot of people will roll their eyes at a formal porter's breakdown but it is definitely a useful way to think about things.

Calnus's picture

Modeling and standard technicals you should know. Doesn't make sense to know technical analysis. If you end up talking about a company or pitching something, definitely know the ins and outs. (This is probably why someone mentioned Porter's.)

MacGruber's picture

Equity Research Writing Sample - Seeking Reviewers ( Originally Posted: 08/12/2014 )

Monkeys, I'm looking for some reviewers to give me opinions on a short, one-page writing sample. Let me know if you can help out, much appreciated if you can.

Thanks in advance!

thebrofessor - Certified Professional

send it over

Thanks, again! +1

chimpchimp's picture

Hi the brofessor. Do you mind to send me a copy as well? i am hving this coming ER modelling test with a BB this Friday. I ll appreciate if anyone can help~

cob5 - Certified Professional

I'll take a look

Stockanalyst's picture

I will take look as well

herbalife4life - Certified Professional

send it over - happy to review

blahblahblahnyc's picture

Send it over, happy to look

kts1010's picture

Please send would love to take a look.

alexto - Certified Professional

Send it , happy to look

samson_dada's picture

Seeking a sample equity research (SHORT) ( Originally Posted: 03/18/2015 )

Anyone here have access to Raymond James , Citi , GS , TD Securities , Needham , Cowen , DB , FBR Capital, RBC , Oppenheimer , Cormark Securities, CIBC or MS?

I am looking for a specific firm that is trying to do a turnaround and want to see why its being rated as a short by some.Would really love to have any kind of insight and help.

carlfox's picture

good format for a ER writing sample? ( Originally Posted: 11/15/2012 )

I am trying to type up a 1 pager on a stock for a ER position. I have zero background in this area and any advice would be highly appreciated. What's a good format to use as a guideline? Any particular way to distinguish myself?

grosse - Certified Professional

I would somewhat copy the format of the research from the firm you are applying to

spaceagecowboy's picture

where you interviewing at kid?

spaceagecowboy: where you interviewing at kid?

I'm not in the interviewing stage yet, I'm just planning to apply and put my best foot forward even though my background is not related to ER at all. It's at a reputable MM bank.

chicandtoughness - Certified Professional

What are you going to do, send in your stock pitch with your cover letter? I'd do some research and a few good verbal pitches going first. Check Gillian Elcock's "How to get an Equity Research Analyst Job", she basically takes you through it step by step. Once you have the basic outline/structure of a stock pitch down, then you can worry about things like formatting and prettifying.

Hummolgen's picture

Even though all responses make sense I'm at a similar spot (I guess) with "spacecowboy"... I am from a totally different field trying to break into the field. And I also want to "practice" doing the analysis, and I think following a format would help that. That's why if there is a good/preferred format (or even one you guys would think the best to gain experience with), I also would appreciate any recommendation...

varunsharma's picture

Need a sample Equity Research Model ( Originally Posted: 01/30/2016 )

Dearest Ppl,

It would be great if somebody can share a sample equity research model. Since, I am interviewing for a ER position, I need to work on a detailed model. If anyone can share one with me it would be great.

Thanks a ton!!!

dick_fluid's picture

don't think you'd need to but they aren't any different from other valuation methods. same stuff - except more time to go into the accounting that's it.

dcfness's picture

ER Work Sample - Quick question regarding emailing ( Originally Posted: 07/05/2012 )

Hey Fellas,

Just had a quick question regarding emailing ER Work sample to the hiring manager.

So I was wondering, whether it would be appropriate to email a a different industry work sample (e.g. Retail) for a ER position with coverage on (e.g. Industrials, Oil & Gas Equipment).

I am confused because if I send the Senior Analyst a report on his coverage space, he is going to kill me with questions, and I am going to look like a complete douche, as my industry knowledge of his space, would be a lot less.

Some thoughts would do wonder for me.

Cheers Brah.

andyinsandiego's picture

Send him an initiation report on Quiksilver.

Later brah,

andyinsandiego: Send him an initiation report on Quiksilver. Later brah,

Bro...my question was more like should I send the hiring manager...a report in his industry? And risk getting slayed???

dcaswerfw's picture

You're a shit head

HarryJason's picture

Trending stocks for this week $SNMX DSKX $ARCO $EVDY

tonydaboiii's picture

Research Sample (Initial Coverage) ( Originally Posted: 01/24/2013 )

Just finished putting it together after couple days of typesetting work. Please, critiques are welcome :)

kingb's picture

I will leave the content comments to others but every ER report on my desk has its text justified - yours will look a lot neater that way as well.

kingb: I will leave the content comments to others but every ER report on my desk has its text justified - yours will look a lot neater that way as well.

Texas Tea - Certified Professional

Good content... make it as concise and to the point as possible. Every sentence should mean something; if the report would survive without it, get rid of it.

gulfcoastbanker: Good content... make it as concise and to the point as possible. Every sentence should mean something; if the report would survive without it, get rid of it.

I've been getting messages from couple fellows asking for a template. Just so you know, not that I didn't want to share it but I really don't have one. For those who are interested in putting their reports together, get the 30 trial version of Adobe InDesign. And once you get it, pm me and I'll walk you through all the basics that you'll need to know. Building from scratch doesn't seem as hard as it looks, and you'll master it within couple .practices

I'll just leave the sample up. lol some mad dude threw a monkey shit at me because I took it down.

*Updates: Fixed some typos, added "Appendix 4: Smartphones Comparison" to demonstrate the homogenous features and close substitutions among the most popular smartphones in nowadays.

redrut's picture

what does the debt ceiling have to do with RIMM? I mean i know it will impact the market as a whole but it just doesn't seem to be right as the first argument to go with.

Love the layout

page 7 RIMM holds about % of the mkt, there is no number there

redrut: page 7 RIMM holds about % of the mkt, there is no number there

I don't know if you can call it an anticipatory default if the firm has over $2bn sitting in the bank. From my experience, you can't put external risks as the forefront of your equity model.

Fundamentally you are pricing a company, of course if Iran nukes the US there may be headwinds but this is not important. Granted the debt ceiling is more likely than nuclear war but you cannot lead with this.

I know that it can hurt to cut well written prose but in this case, the person will pick up this piece of research (from 20 other analysts research) begin reading and bin the paper as soon as he realises you are throwing darts everywhere.

I don't want to be properly negative as the product looks good but you have to get to the point, start with the market and drill down to the company then as a side note, the debt ceiling is a risk factor

woodywoodford's picture

Picture of Thornstein Heins: "Source: Internet" No idea if there's anythign wrong with that, I just thought it was amusing. Very nicely laid out report.

BlackHat - Certified Professional

woodywoodford: Picture of Thornstein Heins: "Source: Internet" No idea if there's anythign wrong with that, I just thought it was amusing. Very nicely laid out report.

Don't think an actual bank would ever cite that way, lol, but minor.

avo427's picture

Sample Model for ER Written Test ( Originally Posted: 07/20/2011 )

I have an interview at BB in a few weeks for an ER research associate position. They mentioned it would include a written test where they provide you with a Press Release and you're supposed to build a model that would incorporate that effect. Does anyone have a sample excel model I can use to study? Thanks!

excelsior's picture

Emergency bump! would anyone be able to send me something like this for my interview?

Cambelle's picture

Hi avo427, did you manage to get anything in the written test? Appreciate any insights on the report and excel.

Flyer987's picture

Prospective Student- Equity Research Reports ( Originally Posted: 03/22/2016 )

I understand there are a bunch of threads about equity research reports but a lot of them are outdated and haven't responded. Would anyone be able to provide research reports? I'd be able to PM anyone who has a copy. I'm a sophomore at a non-target looking to break into Equity Research and wanted a feel of the writing that needs to be done as part of the job.

Thanks Guys!

http://www.wallstreetoasis.com/forums/doing-a-stock-pitch --- for ER

buy a modelling program right now if you really want to learn ER work (modelling, analysis, channel checks, etc)

if you want the feel of a report the old reports over here will do, some sell side firms keep old reports as samples those will do as well, google it you should find some

jonmorris's picture

Equity Research Report formats? ( Originally Posted: 01/13/2010 )

I want to put together a well-written, comprehensive ER report to submit to analysts in the hopes of an Associate role. I'm pretty down with the modelling piece but have no idea what format the written report usually takes... Is there a preferred format? Examples on Google don't look too promising. how about length? Are there guidelines on scope? I'm thinking you could write a 200 page report or a ten page report. thanks for any input

sofib09 - Certified Professional

10 pages is fine, 200 is a big no-no.

Have you been asked for work samples, or are you using these to cold-call/cold-email or send to contacts?

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sample equity research report

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Equity Research Course: 10+ Lessons | Download XLS Free

One of the most exciting careers in corporate finance now is equity research.

Here’s the complete equity research course for you.

As an equity researcher, you’re going to help investors pick profitable stocks.

If you are a good equity researcher, you will be constantly sought after by investors who are looking to maximize their investments.

Who knows, you can even appear on Bloomberg TV.

But how do you become one? That’s our main agenda here. Before we dig deeper, let’s start with what equity research is.

What Is Equity Research?

Equity Research Course Overview

Equity research is the process of determining the fair value of publicly listed stocks to determine if they are overpriced or underpriced.

Overpriced stocks are stocks whose market value is higher than their fair value. On the opposite side, underpriced stocks are stocks whose market values are lower than their fair value.

Because of market corrections , overpriced stocks are expected to go down in value, and underpriced stocks are expected to get higher.

Clients of Equity research include stockbrokers and investment banks . Equity analysts at research firms are usually paid on a per-report basis or sometimes by brokerage trades.

Clients on the buy side firms include insurance companies, hedge funds , private equity funds, mutual funds, and pension funds. 

These firms need research so that they will have a better idea of buying and selling company shares.

Sell-side entities like Goldman Sachs use equity research to convince buy-side entities to buy stocks. 

That’s why companies like Goldman Sachs have equity research departments. Research departments earn indirectly through commissions earned by their sales and trading divisions.

Equity Research Firm Salaries and Bonuses

Equity researchers enjoy a fairly high amount of salaries and bonuses. However, they are relatively lower than those in investment banking . 

Equity Research Salaries

Equity Research Firm Hierarchy

Equity Research Hierarchy

The organizational structure of an equity research firm is simple. Here’s an overview of what it usually looks like. 

The equity research hierarchy is quite similar to investment banking.

There are several senior analysts under the head of research. Usually, each senior analyst covers one to two industries. Under each senior associate are equity research associates as well.

Each associate heads junior analysts.

Junior analysts cover around 10-20 companies in the industry they are assigned to. 

1. Head of Equity Research  

The head of equity research is like the captain of a team at a brokerage firm. They help the team reach their goals and follow their game plan.

  • One of their important jobs is to make sure that they’re using the best methods to figure out how much things are worth. It’s like making sure they’re playing by the rules.
  • They also check and give the green light to research reports that the team writes. These reports are like guides that tell people what to do with their money. Some of these guides are for people in the company, and some are for people outside.
  • The head of equity research also talks to other companies and experts. It’s a bit like the captain of a sports team talking to coaches and other teams.
  • To become the head of equity research, you usually need to work in this field for a long time, like 10 years or more. It’s like becoming a pro at a sport after many years of practice.

2. Senior Analyst

  • They make sure research reports are ready to be published.
  • This means they add notes, extra information, comments, and make changes to reports written by other researchers.
  • They also control how these research documents are shared, making sure they follow the rules and laws of the company.
  • To do this job, they need to know a lot about rules and also be really good with finance stuff.
  • Normally, companies want people to have worked for 5-10 years in Equity Research before they can do this job.

3. Equity Research Associate

An associate’s work is usually not too far away from those that are being done by their subordinates (which are the analysts).

They usually maintain files of companies under the sector they are assigned to.

They provide a fundamental analysis of those companies consistently.

They develop financial models, industry analyses, and sector databases.

They must always be in the loop in terms of news related to the companies and sectors they cover. 

It is very crucial as it is part of their fundamental analysis.

They assist the heads in the publication of research reports.

To be qualified, usually,  2-3 years of experience  are needed. It’s not required to be an MBA or CFA.

4. Junior Analyst

They are entry-level positions in equity research firms. They cover 10-20 companies at a time.

Firms do not require past work experience but rather  internships for all applicants.

A Day in the Life of an Equity Researcher

As an equity research professional, you are generally responsible for your equity research associates making recommendations on whether to buy, sell, or hold shares of stocks. You will  likely be working 10-15 hours a day . Here is a typical day for an equity researcher.

7:30 – 8:00 AM

What you do first is check the emails sent to you the night before. These are mostly from  stock traders inquiring about your research reports.

Next, you take a  quick look at stock markets . Asian markets like Hong Kong and Singapore start first. Along with all these things, the TV is usually on for you to check the news related to your sector. You also check newspapers or websites related to your industry. Tools like Bloomberg also provide you with great updates related to the sector you are working on.

Morning call  usually starts your working hours. Each one will give quick updates about the sector they are holding on to. It makes the other teams, especially the head, be updated overall.

There will also be a sharing of recommendations for research reports.

Trading starts. Though there are different markets, the focus will likely be the city you are in. Then, other sectors will be taken on later. You will monitor the market, and you  will try to find KEY or big developments in your industry.

You study why the stock market behaves that way. It is where you will use your tools, such as valuations, fundamental analysis, and industry analysis .

Based on your latest figures, you estimate or predict the next movements of the stocks of the companies you are monitoring.

You will  create updates on your recommendations, valuations, or Client Requests . You continue to keep track of the data.

By this time, you will receive calls from buy-side clients to discuss market movements. You will be asked about certain details of your investment recommendations found in your research reports.

3:00-3:30 PM

Your local  stock market’s usual close at this time . You can finalize your stock movement data for that year. You will compare it with your expectations and make the necessary changes as possible.  If there are significant differences with your projections, you must create an explanation of why .

You also update your clients regarding the recent stock market movements, especially the significant ones.

You  finalize your reports for submission and review by senior associates . Those publications will be published the next day, so you need to be fast. You will probably be making 1-3 reports hours per week per analyst.

It’s now safe to go home. Review meetings are usually finished already. And most especially, you wouldn’t be accused of having too little work.

It would be best if you showed them you have a lot of loads, and you are hardworking, that’s why you cannot go home early.

Equity Research Course and Financial Modeling

If you want to study Equity Research in-depth, here are the courses:

  • Excel and Financial Modeling Fundamentals
  • Advanced Financial Modeling
  • Bank and Financial Institution Modeling
  • Oil and Gas Modeling
  • Real Estate and REIT Modeling

Equity Research Lingo

1. sell-side vs buy-side.

 In equity research, the sell side and buy side refer to the type of clients the professional serves. Sell-side firms are like the middlemen in the world of buying and selling stocks and other financial assets. They include banks and stockbrokers, and they’re the ones who make it easier for you to trade your investments.

They sell stocks to gain profit.

Buy-side entities buy stocks to add to their investments. Think of buy-side companies as groups of people and businesses who are like smart money managers. They use their money to try and make even more money. They work really hard to help their investments grow so they can achieve their financial dreams, kind of like growing a money tree.

2. Industry Analysis

Industry analysis is a method of understanding a company’s health in terms of how well it performs compared to companies operating in the same industry as it is. 

3. Primary Market vs Secondary Market

The main difference between these two is where the institutional investors have bought the stocks.

In primary capital markets however , investors buy the stocks from the companies issuing them. Whereas in secondary markets, investors buy securities from one another.

4. Fundamental Analysis vs Technical Analysis

Fundamental analysis is a way of analyzing stocks by looking at the different external factors affecting them. Examples include economic conditions, industry trends, and market share.

Technical analysis is like studying a stock’s history through its price charts to guess how it might perform in the future. People do this to spot patterns and trends that could help predict if the stock’s value will go up or down. It’s a bit like looking at the past to guess what might happen next with a stock.

5. Bull Market vs Bear Market

A bull market is a stock market condition wherein prices are generally going up. On the contrary, bear markets experience continuous loss of values of stocks trading on them.

6. Growth Stocks vs Blue Chip Stocks

These two classify companies based on the risks and rewards associated with them.

Blue-chip stocks are shares of stock of big companies that are already stable  and have proven historical performance. They are relatively less risky, and as such, the expected return on investment is lower than other stocks.

On the other hand,  growth stocks are shares of companies that still need to be stable . Because of this, investing in these companies is risky. However, they present a high potential for great profits once these companies take off.

7. SEC Filings

 SEC filings are publicly available financial documents filed to the government (SEC in the U.S.) by regulated companies. They are often sources of data for valuations and financial statements analysis.

Some of the documents that can be found are Registration statements for securities offered, a 10K Report (business summary, management discussion and analysis, and financial statements), and an 8K report which details major developments of the company.

8. Financial Modeling

Financial modeling is a method used to forecast or project a business’s future financial performance. Determining future performance is critical in estimating what will be a stock’s future value. As such, financial modeling is a must-learn for equity researchers.

9. Equity Research stock pitch

 A stock pitch is a report that will entice an investor to buy a certain security. It is usually done through an equity research report .

Technical Skills Needed

1. macroeconomic analysis.

Before you get to the business sector, you need to see  first the overall health of an economy . From there, you will be able to determine which sectors are likely to perform and those that will not.

If you are assigned a sector, you will be able to understand deeply why your industry behaves like that.

As a beginner equity analyst, you will be assigned to a specific industry or sector. That’s why you should be able to do your industry research and analysis. You must be able to do competitive analysis and study industry dynamics.

3. Company Analysis: Fundamental Analysis and Ratio Analysis

Now that you have studied the external factors affecting a company through macroeconomic analysis and industry analysis, it’s time to  explore the internal factors using fundamental analysis .

Fundamental analysis involves analyzing the company’s financials (and non-financial data) to determine the overall health and future of the company.

Fundamental analysis includes ratio analysis vertical and horizontal analysis . The analysis also involves non-financial data, for example, frequent labor strikes that could affect the production of the company reports earnings in the future.

When you do analysis, you usually need at least three consecutive years to make a good estimate of financial movements. In this regard, you need the three basic financial statements: income statement, balance sheet, and cash flow statement.

4. Valuation

You need valuation skills to estimate the future performance of the company. The future performance will determine if you will buy, sell, or hold to your clients.

You use your financial planning models to do this.

Here are the two most commonly used valuation models , Discounted Cash Flows and Comparable Companies Analysis:

4.1 Discounted Cash Flows

DCF involves  discounting the future cash flows of the company using an applicable interest rate  (computed using WACC) to determine the current value of the company.

For example, if the company estimates USD10M in sales for the next 5 years, this is not their value for today because of the cost of equity. There would be a cost-of-money component that must be deducted.

If the computed DCF value is higher than the current stock price, then you should say BUY or HOLD (if bought already) because the value is expected to appreciate. Otherwise, you recommend selling.

How do you do DCF?

images 1

Download DCF Model XLS File .

Step 1. Compute WACC

WACC, which stands for “Weighted Average Cost of Capital,” is like a special recipe made up of three ingredients:

  • Cost of Debt : This is like the interest you pay when you borrow money, like taking out a student loan or a car loan.
  • Cost of Preferred Shares : Think of this as the price you need to pay for a fancy membership that gives you certain privileges in a club or group.
  • Cost of Common Shares : This is like the price you pay for a share of a company’s stock when you want to own a piece of that company.

So, to figure out the WACC, you need to calculate these three costs and mix them together in the right proportions, just like creating a special recipe with different ingredients.

1. Cost of Debt 

The cost of debt is simply the after-tax rate of your debt security. It is computed by multiplying the before-tax interest rate by (100%-tax rate).

Cost of Debt

 2. Cost of Preferred Shares  

The cost of preferred shares is equal to the dividend per share divided by the share price for preferred shares.

Cost of Preferred Shares

 3. Cost of common shares  

computation of the cost of common shares is a little tricky. Suppose r­e is equal to the cost of common shares:

re = rf +ß x (rm + rf)

rf = Risk-free rate

ß = Predicted equity beta (levered)

(rm + rf) = Market Risk premium

The  risk-free rate  is the rate given to securities that have almost no risks involved. The interest rate of long-term government bonds normally presents it.

Beta  is the measure of systematic risk of a security. In other words, it is a measure of how changes in the stock market affect the movement of such security.

A market risk premium  is the difference between the risk-free rate and the market rate. Meaning it is the added cost due to additional risks involved.

4. Computation of WACC

WACC can be computed by simply multiplying each security’s cost by its % share in the total overall funds of the company. To calculate that %, you will need to use market values instead of book values.

Computation of WACC

Step 2. Compute FCF

It would be best if you computed unleveled Free Cash Flows. This FCF is the total amount of cash a business has before paying any financial obligations.

a. To compute FCF, we will start with After Tax Operating Income.

Free Cash Flows

b. We will now add back effects of non-cash items into the income.

 Non Cash items

c. Take into consideration other adjusting items.

A  decrease in assets  must be deducted because they reduce cash but do not affect net income. The opposite happens when assets increase.

An increase in payables  decreases cash but does not affect net income, so we must deduct it. The opposite has the opposite effect.

Other adjusting items

d.  Capital expenditures must be deducted  because they decrease cash but do not affect net income. It is the last adjustment you will make to compute FCF.

Capital Expenditures

e. Project all these figures 5 years ahead using the average growth rate of the historical figures you have.

 Forecast

f. Using the WACC as the discount rate,  compute the present value of the FCFs  you calculated for each year. The total of those present values is equal to the Free Cash Flow.

Sum of Discounted Cash Flows

Step 3. Terminal Value

Terminal value is the  present value of all cash flows beyond your projection period . In our example, it is equal to the free cash flows of all cash flows beyond YEAR 5.

It is how we compute Terminal Value.

Terminal Value

Get the long-term growth rate of the company. In our example, we will assume that the long-term growth rate is equal to the average sales growth rate.

Get the Free Cash Flow for Year 6 by multiplying the FCF of Year 5 by (1 + long-term growth rate)

Get the present value of Year 6 FCF by using the WACC as the discount rate. The PV is now the Terminal Value of our valuation.

Step 4. Diluted Shares

The total diluted number of shares is  equal to all common shares outstanding plus the dilutive effect of convertible securities.

It is how to compute the dilutive effect.

From options and Warrants:  If the strike price of the share is less than the current stock price, we assume it will be taken advantage of by the holder, meaning he will convert those to common shares. What we do is multiply the number of shares to be converted and multiply by the strike price. We assume that this is equal to the amount that is going to be used to buy shares. We then divide this amount by the current strike price to compute the number of diluted shares.

Convertible Debt Securities:  We assume that the convertible debt will be converted to common shares

Convertible Preferred Shares:  We assume that the shares will be converted to common shares

Get the sum of all common shares outstanding and potentially dilutive items to get the TOTAL number of fully diluted shares:

Diluted Shares

Step 5. Equity Value and Enterprise Value

To compute Equity Value, we will add the following:

a. Enterprise Value  

Add the FCF we got in Step 2 and the Terminal Value we got in Step 3.

b. Net Debt 

Imagine you’re looking at a company’s financial situation. To figure out how much money they really owe and have, you’d start by adding up all their short-term debts (which are the debts they need to pay back soon), their long-term debts (the ones they’ll pay back over a longer period), any money owed to outside investors that don’t have control in the company, and any preferred shares they’ve issued.

Once you’ve got that total, you’d then subtract the cash they have on hand, including any easily accessible money like cash in the bank. This gives you a better picture of the company’s financial health , showing how much they owe versus how much money they have readily available.

After which, divide the total Equity Value by the number of totally diluted shares. We’ll get the Equity Value per share.

Step 6. Compare and Recommend

Compare the Equity value per share with the current market share price.

If the Current Market value of the share is  higher  than the Equity Value per share, then the stocks are overvalued. It will lose its value soon. Recommend to SELL the stocks.

If the Current Market value of the share is  lower  than the Equity Value per share, then the stocks are undervalued. Soon enough, the stock’s value is expected to go up. Recommend to SELL or HOLD the stocks.

4.2. Relative Valuation/Comparable Companies Analysis

Relative valuation is the  use of valuation multiplies in comparing one company vs another . Valuation multiples used usually include EV, EBITDA Price-Earnings, EV/EBITDA, and Book value, among others.

It is how you do a Comparable Companies Analysis:

Download XLS

Download Comparable Companies Analysis Excel File .

Collect Shares information

First, you need to collect information about the equity shares. Here is the data you need to make a comparable public companies analysis:

Company name

Company Ticker (For easier labeling)

Date of latest filing with Securities/Exchange government agency (so that the users of the report will know from which period the financial statement data were taken)

Date of latest fiscal year-end

Basic common shares outstanding

Other common shares outstanding (Class A, B, C, etc)

Potentially dilutive items.  (You will need to compute this one. Potentially dilutive items come from Options, Warrants, Debt securities convertible to common shares, and Preference shares convertible to common shares)

Income Statements

When you get income statement data, you don’t just get the data of earnings season the last available fiscal year. You need the following set of income statement data:

Latest Available Fiscal Year Data

Latest Quarterly Data after Last Fiscal Year

Latest Quarter Minus One Year

Trailing Twelve Months

How about the income statement itself? What are the income and expense accounts that we need to include?

We need to include everything. However, we will have to make adjustments. Also, you can make your analysis by group of income/expense rather than being specific with each account. Here’s the format in our example:

Income Statement

Here are the parts of the income statement that you need to provide:

Sales/Revenue  – It is the gross income of businesses. Sales are for manufacturing and merchandising businesses. Revenues are for service businesses.

Cost of Goods Sold  – these are the costs of producing or the cost of purchasing inventory items. It applies only to manufacturing and merchandising businesses.

Gross Margin  –It is the difference between Sales/Revenues and Cost of Goods Sold.

General, Selling, and Administrative Expenses  – these are the operating expenses of the company. In our example, we had it lumped into one account. In actual practice, you are more likely required to separate each.

General expenses  – are operating expenses that cannot be allocated in any department. Examples are utilities, janitorial services, and security services.

Selling expenses  – These are expenses that are directly related to selling products or services. Examples are delivery trucks and sales agent payroll.

Administrative expenses  – expenses related to managing the business. Examples are the payroll of the general manager.

Other expenses  – These are various expenses that cannot be classified as general, selling, or administrative. These are usually small in amount.

Other income  – income not related to the main business of the company.

Non-operating losses  – these are losses not related to the ordinary course of business of the company. Examples are losses on the sale of assets or business units.

Earnings Before Interest Expenses  – It is the net income of the company before deduction of interest expenses and taxes.

Interest Expense  – interest on various loans

Pretax income  – net income before deducting taxes

After-tax income before adjustments  –It is the income before we make adjustments that extraordinarily affect net income. We remove them because they will affect the results of our operations and, consequently, the decisions of the managers.

Examples of adjustments are one-time losses or one-time gains on the sale of business assets. These items are removed because they are extraordinary, meaning they are made outside the usual course of the business.

Net Income after Adjustments  – It is the net income we are going to use for our valuation.

EBITDA

We will compute EBITDA for purposes of our valuations. It is done by simply deducing depreciation and amortization expenses from Earnings Before Interest and Taxes.

Latest Quarterly Data after Last Fiscal Year

We will also be needing the available data for the latest quarterly period after the fiscal year.

Latest Quarter Minus One Year

As well as the data from the latest Quarter Minus One Year

Trailing Twelve Months

You also need data from the trailing twelve months. You can do this by simply adding the data figures from the Latest Fiscal Year and the Latest Available quarterly period. You then deduct the data for the trailing twelve months from the sum of the two.

Check out the Excel companion of this guide so that you can see the formula used.

Get the Enterprise Value

Enterprise Value

It is simple to get the Enterprise Value. Just add these two:

Total Market Value (TMV)  – It is the product of the current stock price and diluted number of shares.

To determine Net Debt, you combine short-term debt (including a fraction of long-term debt), long-term debt, non-controlling interest, and preferred shares, and then subtract the amount of cash and cash equivalents.

Determine the total number of Diluted Shares .

There are different methods to compute diluted items depending on where the shares will be coming from.

Convertible Debt Securities:  We assume that the convertible debt will be converted to common shares.

Convertible Preferred Shares:  We assume that the shares will be converted to common shares.

Calculate Forecasts and Multiples 

It is simple to compute multiples. You will have to use the formulas and link them to the proper accounts.

Multiples

Likewise, projections are 100+growth rate, which, in our case, we use the average growth rate of the past 3 years.

Compute Valuation of companies .

To compute the valuation of each company, use the AVE, MIN, and MAX multiples. Through these multiples, you can estimate the average price of each stock, as well as the minimum and maximum values in the range.

For example, we have an average Last Fiscal Year + 1 EV/Revenues of 3.4x.

If the first company has a Revenue of 100, we multiply 100 by 3.4. The resulting value of 34 is the estimated average Enterprise Value of the company.

Evaluate results and make recommendations .

Based on the different values of the companies, you are now ready to make a comparison. Based on the comparisons, you will recommend which stocks to BUY, SELL, or HOLD.

Equity Research Report Writing – Sample, Format, Template

What should you find in an equity research report

It is your main output for equity research analysts .

Industry Overview

In this portion, you will learn the  major trends affecting the industry currently . It also involves competitive analysis and how the industry affects the company in the subject.

The analysis involves factors like the current state of the economy, interest rates, technology, and social trends, among others. 

1. Management

Who are the members of the management team, and their expertise and experience? 

It is important for securities research and for investors who are not active with the company. Equity researchers have frequent attendance at meetings involving company management . They know how their leadership is and their capabilities.

Investors cannot do this on their own; that’s why they rely on equity researchers.

2. Company Financials and Ratios

In this portion, equity researchers put  key historical figures of the company . Accounts that are usually included are Sales, Cost of Sales, Revenues, and OPEX. They also provide ratio analysis, vertical analysis, and historical analysis of those figures to make more value.

Researchers usually focus on profitability (Income statement) together with short-term and long-term liquidity (balance sheet and cash flows).

3. Projections

Projections are where the most value of research reports comes from.

Researchers would put here their estimated future value of the company.

There are  generally two ways to do forecasting .

First is the  bottom-up method  wherein you start with the drivers of revenue like customer base, number of products, or price and then determine the revenues and expenses associated with it.

The second type is to use  the top-down approach  wherein you start with the industry, then the market share of the company, and from there determine how much revenue the company will be getting.

In actual practice, both methods have influenced every forecast that is being presented.

Here, the researcher presents the value of the company using methodologies such as DCF or Comparable Companies. These methods take forecasting up a notch by adding more assumptions like the cost of equity or cost of money.

Go to the section for valuation methodologies to learn more.

5. Recommendations

Finally, based on the valuation figures and market values, the researcher would recommend investors buy or sell stocks. There are three common recommendations:

BUY  – if the valuation is higher than the market value. It means the stocks are expected to rise in price in the future.

SELL  – if the valuation is lower than the market value. If this is the case, the researchers expected that the stock is overvalued and, thus, will go down in value.

HOLD  – when you already have the stocks, hold them because it is expected that they will rise in value.

Sample Equity Research Reports

  • Apple Inc. Equity Research Report
  • NASDAQ Stock Research
  • Credit Suisse McDonald’s Equity Research

Tips on How to Write a Good Research Report

Here are good ways to create a research report that will be read and based upon by clients and potential clients.

1. Have a good view of the company .

What’s a good view?

The analyst must  present complete and relevant information about the company . We’re not talking about just financials but also non-financial data as well.

Other information that must be included is  revenue drivers, market shares, investment rationale, growth, and cost drivers , as well as an enumeration of risks.

Create a clear discussion of the business model of the company and its major targets in the next 3 to 5 years. It’s important to give a brief background of who will run these strategies (e.g., members of the executive management)

It would be best if you also discussed  pending large legal matters  that the company is facing and how they could affect the income and operations of the company. 

2. Create a non-confusing recommendation.

Recommendations used are usually BUY, SELL, and HOLD. However, some analysts use terms like underperforming or outperforming.

To avoid creating confusion with clients,  follow the format of your company . That format is the one clients are already used to. Changing the format will create confusion among clients.

Indicate the target price together with the recommendation.

3. Provide key ratios .

Along with financial statement figures, there should be vertical and horizontal ratios. Vertical rations are reactions wherein the amount is presented as a percentage of the total value (e.g., Sales, Total Assets, Total Liabilities, Total Equity).

Other ratios that investors usually look for are EBIT/Sales, EBITDA/Sales, Return on Equity, Return on Assets, Quick ratio, Current Assets ratio, Debt to Equity Ratio, and Dividend Yield.

4. Provide Share Price Charts .

Investors are  usually concerned with the price of the stock for the past 52 weeks . They tend to look for trends that they can ride. Along with it, present the 52-week low and 52-week high for the stock.

Should it be better to include a short-term chart, do so. Whatever the client needs, provide it.

5. The investment rationale should be well-supported .

The investment rationale is the reason  why you made such  investment recommendations. You need to put all supporting details, just the relevant ones. Remember, your clients are busy people; don’t feed them with too much information. 

Internships 

Internships are very important for those who are eyeing full-time research jobs. Almost 100% of the time, firms are looking for applicants who already have working experience as interns.

Here are the usual requirements found in job postings for Equity research internships:

Passionate about financial markets, especially equity markets

Graduate from a good university (preferably target universities)

Strong knowledge of Excel, accounting, and valuation methods

Excellent analytical, organization, and communication skills, and interpersonal skills

Very proficient with Excel

Here are the usual tasks of interns:

Active participation in recurring regular meetings with the team to discuss market updates and report submissions

Conduct fundamental research reports

Use resources like SEC Filings, Bloomberg, and other research tools

Track stock and earnings movements of companies

1. Allowances

Here are the estimated allowances for equity research interns in different countries:

UK – GBP 3,000/mo

SG – SGD1,000/mo

US – USD2,500/mo

India – INR30,000/mo

2. How to get into an equity research internship?

 Getting into an equity research internship is not standardized. Your best bet to get an internship is through the following:

You graduated from a well-known business school. The firms will most likely visit your school to recruit interns.

Browse online job boards, especially for big firms.

For smaller firms, your best chance of getting in is through networks, cold emails, and cold calls. They don’t usually post their need for interns because, in the first place, they need to look for one actively.

Making the first move can convince them that you are worth their time to be their intern.

Equity Research Job- How to Get hired?

Before you apply for a job, there are two differences you need first to learn. 

The difference between sell-side analysts and buy-side analysts, 

The difference between equity research analysts and other investment banking analysts and how investment bankers work.

1. Sell-side Equity Research Analyst vs Buy-Side Equity Research Analyst

Sell-side equity research analyst :.

The sell-side analyst typically focuses on providing analysis on all companies under a sector to provide it to investors or brokerage firms.

They don’t have preferences as to which companies they will be making reports on.

It’s up to the clients to decide their companies based on the research reports. Their earnings are based on the reports they give.

If they are an in-house research department helping the Sales and trading team, then their services are merely support. They earn based on how the Sales they are supporting perform.

They usually cover 2-3 companies at a time.

Buy-side Equity Research Analyst :

These analysts have similar skill sets as the sell-side. However, their focus is to find the best-performing stocks.

They will recommend these stocks to their companies for them to purchase.

Because of this difference in focus, they tend to cover more sectors than sell-side analysts. The more sectors they cover, the higher their chance of getting stocks that are undervalued in the market.

It’s not surprising if they cover more than 20 companies at a time.

2. Equity Research vs Trading vs Investment Banking

Often, applicants need clarification with these three. It would be best if you learned that although they are all in finance, they are entirely different.

Here are the primary differences between equity research, trading, and investment banking.

Equity Research vs Trading vs Investment Banking

4 Strategies to Get into Equity Research Firms

1. stock research reports and valuations ..

Attach your stock research reports and valuations (from Excel) on your application form. 

It will show your capacity and will make you stand out from all other applicants.

2. Take outside University courses Equity Research Training

University education usually needs to be more focused. Taking extra classes targeting a career in equity research and investment banking will create a huge boost in your CV.

3. Internships at Asset Management Firms or Small Hedge Funds

Getting internships from asset management firms or hedge funds will help you a lot in landing a job in Equity Research firms.

This kind of company will give you experience in building financial models and valuations that are crucial in making equity research reports.

However, only a few applicants can find internships at hedge funds , etc. It’s because those spots are not usually advertised, but rather, they are not.

You will find it by hard means: cold calling, cold emails, and networking.

4. Professional networking using LinkedIn

LinkedIn is the best social media platform to network professionally. It allows you to see connections between you and your target firm easily.

Recruiting Process

How does recruiting look like in Equity Research

The following technical topics are covered in entrance exams:

Economics, especially macroeconomics or the part of economics dealing with large-scale economic factors such as national income, inflation, and interest rates

Stock market

Industry Analysis

Valuation methodologies such as DCF and Comparable Companies’ analysis

Accounting, with a focus on analysis and interrelationships of the three basic financial statements (Income Statement, Balance Sheet, and Cash Flow Statements)

 A word on Stock Pitches

Using these financial research tools, you can be asked to pitch a particular stock to your interviewer or a panel. As such, it’s important to know by heart how equity research is done on the job, not just in theory.

To prepare for this, do some practice reports on your own.

Equity Research Interview – We Have a Guide

Interviews are centered mostly on topics of exams we mentioned above. In some cases, stock pitches are included in interview sessions.

They are looking for people who can communicate well because, as an equity research analyst , you tend will spend a lot of time communicating with clients.

Equity Research Interview Questions

You can answer technical questions if you study our guides on valuation. Here are  some more questions you might get asked.

1. If you had $1 million to invest, what would you do with it?

 You must always be 100% ready with this question. How do you get ready? Pick up some stocks ahead of time, study them, and when this question comes, answer them.

Say to them your rationale, that you did research about them, valuations, etc.

You must not only talk about stock. You must also include debt securities to improve diversification. Describe to them your risk appetite and your knowledge of stocks.  Ideally, you will pick a portfolio mix that is risky because you are very knowledgeable in finance and securities .

This portfolio mix would include a relatively large percentage of stocks, a lower portion of bonds, and an even lower percentage of safe securities such as government bonds and bills.

2. Tell me about a company you admire and what makes it attractive.

It is a question that tests your technical knowledge.

Prepare ahead of time by knowing relevant valuations, multiples, and news management of the company you would like to present.

You can bring your report and your working papers and show them. It’s better to show that.

3. Pitch me a stock (typically will be followed up with a challenge – e.g., why has the market not priced this in? etc.)

Prepare at least 5 stocks. Those stocks should be composed of Small-cap stocks and Large-cap stocks and stocks for short selling.

Use valuations, multiples, key metrics, the background of the company, as well as the management to support your recommendations.

Well, follow the steps in doing equity research for you to capture all the things needed to answer the question effectively.

4. How do you value a stock?

We use valuation methodologies. What are valuation methodologies? These are the valuations used to value stocks.

Examples are Discounted Cash Flow, then discuss how it works. You can refer to our discussion on discounted cash flows.

There is also a Comparable Companies analysis.  (refer to our previous discussion.)

Multiples are very useful as well in determining the future value of a stock.

5. What are the major valuation methodologies?

How do you value a company_

6. When would you and when would you not use a DCF valuation methodology?

 Discounted cash flow is usually the most used and, therefore, the most asked methodology in equity research. You must be ready for all sorts of questions about DCF.

One of the common questions about DCF is about its strengths and weaknesses

7. When should you use DCF?

DCF is usually preferred because it greatly reduces the effects of non-economic factors, subjective accounting policies (e.g., Accruals), and short-term market movements

DCF is effective when the company is already operating for at least three years.

This method is also reliable if the analyst can reliably measure the future cash flows of the company. As such, if the company or the industry is so erratic, it’s better not to rely on DCF.

If the analyst is confident with the assumptions that will be going to be used

8. When should you not use DCF?

If the analyst cannot reliably create reliable financial and market assumptions

If the company is a start-up, since cash flows cannot be easily projected

DCF must not be used if the company does not practice a high level of transparency in its financial statements and relevant data

If there’s not much time, especially since DCF is time-consuming

9. What are the most common multiples used to value a company?

Here are the common multiples used to value a company:

Enterprise Value Multiples : these are multiples that consider both creditors and shareholders. Remember that Enterprise Value is Equity value plus net debt.

EV/Unlevered Free Cash Flow

Equity Value Multiples 

these are multiples concerned only with shareholder’s equity.

Price/Earnings Ratio

Equity Value / Book Value

Price/Earnings Growth Ratio

Jumping from one career to equity research

1. what do firms look for in their equity analyst and researcher candidates.

Good in accounting

Good in investor relations

Good in Sales, for you need to get clients so that your equity research reports will get you income 

2. What you must do?

Network with people who already made such kind of transition. They can help you out.

Where can you find them? Through your networks.

You can also search on LinkedIn to find these people and connect with them through common networks.

When you are already connected with them, let your common network introduce you to each other.

Tell that person that you are undergoing a career shift and ask if you can treat them to coffee because you want to learn from them.

If you have done it right, you will be able to sit with them in person.

You can also benefit from that person through his recommendations to the equity research department where they work.

2.1. Study relevant courses and certifications

There’s no way you can cut this one from the process.

Even if you are in the finance investment banking industry, you’ll need to acquire additional knowledge and skills through training. There are relevant courses and certifications you can take to make the jump.

Earn a finance degree. 

It is most important if you are a graduate of a non-finance course. Though there could be a possibility a non-finance degree holder will be hired, that possibility is too low. If you want to increase your chances a hundredfold, you must graduate with a finance degree. 

Finish your MBA. 

It could help, but not a necessity. Most companies look for applicants who have relevant experiences rather than being graduates of MBAs.

Chartered Financial Analyst. 

The Chartered Financial Analyst is a popular certification among finance professionals.

It is a designation given by the CFA institutes that guarantees that the professional is highly competent in terms of financial analysis.

Is this required? No. Is this helpful? Yes, but more than working experience is needed.

Though it will look good on your resume, your results in interviews will speak louder than your certification.

Nevertheless, the knowledge you gain from undergoing CFA will increase your competence in terms of company analysis and valuation.

If you aim to improve your skillsets as an either investment banker or banking equity research researcher, BIWS offers a lot of different options for you.

There are courses in Excel and Financial Modeling Fundamentals, Advanced Financial Modeling, Equity Research, and a lot more.

What’s more, is that you’ll get USD397 Prime access as a Bonus!

2.2 Apply for internship

Aside from graduating from a finance course, this could be the 2nd best tool for you to get a full-time private equity analyst or equity research associate job .

Firms are always looking for people with experience already. And as a new professional, there’s no other way to get real-life experience than internships.

That’s why we dedicated a portion of this book to internships. Just follow the steps here on how you can get the internship that will ultimately lead you to your dream job.

How to Succeed at Your Job 

1. equity research soft skills – report writing skills .

Writing skills do not necessarily mean being able to use as many technical words as possible; using less jargon is more desirable. Here are the qualities of written communication skills you need to master to create good research consistently

Use technical jargon as fewer as possible. Though your audience is mostly acquainted with these words, a good research report is easily understandable in just one go.

Use as few words as possible. If it’s possible to report on one page, then it would be best. All your clients are busy people.

Use graphs and charts. Be visual. Images are easier to understand than words.

2. Financial Valuation and Modeling

 You should know each valuation and modeling method by heart. You must know each other inside and out. Learn when and when not to use each.

3. Accounting

 You must know how to read financial statements!

You may not be an accountant, but you need to know at least the nature of each of the accounts found in the financial statements. There are very specialized terms; don’t be afraid to ask. You are not stupid if you ask; you are silly if you don’t ask, but you need to.

Know the interrelationships of each of the basic financial statements (balance sheet, income statement, and cash flow). Know how a change in one of these statements will affect the other two.

Study accounting ratios. When you substantiate your report, often, you also need to use ratios, not just valuations. Know when to use liquidity ratios, solvency ratios, activity ratios, etc. 

4. Be a Superstar in Excel

What are the usual things you’re going to use Excel with?

Sensitivity analysis

Charts and Graphs

If you are not good at Excel, it will take you a long time to finish an equity research report. Mind you, you will be covering about 10-20 companies at a time! Imagine how proficient you must be to value all these companies.

Always remember the importance of knowing Excel shortcuts and tricks.

Equity Research- Exit Opportunities

1. internal promotion.

If you want to go all out in equity research, you can improve yourself inside the firm.

You can go from being an analyst to being the head of the equity research division.

If you want to grow with another company, it’s advisable to stay first in one company for two to three years, especially when you are just starting.

It’s better to be seen as an employee who doesn’t job-hop often. Plus, you get a lot of experience, which you can use as leverage for your next job application. 

2. Investment Banking 

Though there are a lot of similar skills between investment bankers, the equity analysts and researchers, it’s still quite tough to make the transition.

There are a lot of other skills you must learn and improve, like working on Initial Public Offerings or M&A transactions.

We had previously distinguished the difference between the two fields.

If you want to make the transition, you must first fill the gaps in your skills through continuous learning or, perhaps, going first to an investment bank or banking internship .

3. Private Equity/Hedge Funds

You can use your equity research skills to study potential investments.

You can use your skills in stocks to identify which companies will greatly increase in value in the next years.

It will help you get a higher return on investments of the firm.

Instead of being the head of equity research, you can aim to be a Private Equity Fund Manager.

The same goes with Hedge Funds and other sell-side firms.

4. Corporate Finance

If you’re tired of the finance industry, you can choose to go to private companies .

You can use your skills in financial analysis to do a competitor analysis and find ways to improve the profitability of the company.

You can also use your skills in doing company budgets and determine where the company is going in the next few years. You can also be involved in the financial analysis of planning projects.

You can also go to investor relations, where you can community the company’s health through your skills in analysis and reporting.

Equity Research Careers and MiFID II: Is Equity research growing or dying?

1. what is mifid ii.

MiFID 2 (Markets Financial Instruments Derivative 2) is a legislation by the Europeans that promotes transparency and effective regulation of financial markets.

They aim to protect investors and to make the EU’s financial markets more competitive than the US capital markets are.

Here’s a glimpse of what MiFID II is all about:

Beginner's Guide to MIFiD II

2. How does it affect equity research?

One of the main goals of MiFID II is to force firms to charge for their equity research reports rather than giving them for free. It’s not free because it’s part of the brokerage commission paid by investors.

3. So, why does the EU want it charged?

Because if research reports are paid via commission,  there could be a tendency for analysts to get biased.

They, of course, want to sell shares so that they can earn.

It could result in a bias in the reports that they will be giving their clients.

With a plan that charges equity research reports, there is a lesser chance of bias since they can earn even though firms can’t sell shares.

There’s also a  stipulation that firms cannot provide equity research reports unless they are registered as investment advisors.

The result?

Lots of equity research professionals could lose their jobs. Firms will cut back operations of equity research because they don’t have to monitor every stock out there, but rather, only the requests of clients.

On the other hand, this could  help equity research by improving the quality of reports . Those who do equity research can enjoy a higher level of reputation among investors.

So, is equity research dying or growing?

In terms of numbers, it is dying. However, in terms of the quality of the profession, equity research is growing more prominent than ever.

My Exclusive Insights for You- Are you ready to become an equity researcher?

Being an equity researcher is a rewarding one.

But every rewarding career has its costs. You must be willing to pay the costs.

You must be willing to study hard, network professionally, and apply excellently.

What’s stopping you from reaching your dream job?

Is there anything else you want to learn about?

Perhaps you need a practical equity research course , or maybe just a little message will lighten your mood up.

Related posts:

Avadhut

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  4. Equity Research Report: How to Write?, Format, Examples, Template

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VIDEO

  1. Types of Equity Research #fundamentalanalysis #technicalanalysis

  2. What is equity?

  3. Invact Equity Research Core Course

  4. CFA IRC 2023

  5. Equity Research cohort : Dec 2023 batch

  6. How Much an Equity Researcher Makes #shorts #career #salary #equityresearch

COMMENTS

  1. Equity Research Report

    Equity Research Report | Sample Format + JPM Example (PDF) 4 Investment Analysis Equity Research Report Guide to Understanding an Equity Research Report View Modeling Courses What is an Equity Research Report? Sell-side equity research analysts primarily communicate their ideas through published equity research reports.

  2. Equity Research Report: Samples, Tutorials, and Explanations

    Table of Contents: 1:43: Part 1: Stock Pitches vs. Equity Research Reports 6:00: Part 2: The 4 Main Differences in Research Reports 12:46: Part 3: Sample Reports and the Typical Sections

  3. Equity Research Report

    An equity research report is a document prepared by an Analyst that provides a recommendation on whether investors should buy, hold, or sell shares of a public company. Additionally, it provides an overview of the business, the industry it operates in, the management team, its financial performance, risks, and the target price.

  4. How to Write Equity Research Report: A Step-by-Step Guide

    The questions like—Who makes it? Who reads and uses it? What are the different types of equity research reports?—are answered clearly and elaborately. It briefly talks about the various key contents of an ER report. And lastly, it explains the need to provide a disclaimer at the end of an ER report.

  5. EQUITY RESEARCH REPORT ESSENTIALS

    EQUITY RESEARCH REPORT ESSENTIALS An equity research report can include varying levels of detail, and although there is no industry standard when it comes to format, there are common elements to all thorough and effective equity research reports.

  6. Equity Research Report (Meaning, Sample)

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    An equity research report is a document prepared by an equity analyst. It is a form of communication between financial experts and investors. The analyst conducts an in-depth analysis of a company, industry, or even an economy and explains his findings in the form of a report.

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    An equity research report is a document prepared by an analyst who is part of an investment research team in a brokerage firm or investment bank. It provides an overview of the business, the industry it operates in, the management team, the company's financial performance, and risks, and includes a target price and investment recommendation.

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    An equity research report is a document prepared by an equity research analyst that often provides insight on whether investors should buy, hold, or sell shares of a public company. In an equity research report, an analyst lays out their recommendation, target price, investment thesis, valuation, and risks. There are multiple forms of equity ...

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    An equity research report is a document prepared by an analyst that gives an overview of a business, including the industry it operates in, its management team, its financial performance, risks, and its target price.

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    3. Mention the company name and current target price. State the company's name at the top of the research report and the stock's calculated target price after that. 4. Write an executive summary and add your recommendation/rating. Add a quick summary about the company, mentioning its position in the industry, and after that, properly ...

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    Examples. 1. Financial Analysis Report Template. Shareholders and investors need a way to communicate with an analyst about the company's finances. This is where equity research reports come in. Analyst record and present forecast, valuation, management overview, and recommendations in equity research reports for investors to further analyze ...

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    An equity research report is a document prepared of an financial that provides a recommendation for investors to buy, hold, or sell shares of a company. Oh, and by and way, one risky factor is that the your kraft reports lower-than-expected earnings. The Four Main Differences in Equity Research Reports. To main differences are as follows:

  17. Sample Research

    Sample Research: Energy. December 31, 2019 - XEBEC Adsorption Inc. October 21, 2019 - Questor Technology Inc. June 25, 2018 - STEP Energy Services Ltd. June 20, 2018 - Atlantica Yield plc.

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  23. PDF Sample Morningstar Equity Research Reports Table of Contents 2 Stock

    This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. ... Morningstar Equity Research | Contents 2 2 SAMPLE.