Financial Analyst

HomeGlossaryFFinancial Analyst

A core activity at TipRanks is measuring and ranking financial analysts (often referred to as research analysts), investment analysts, or securities analysts. Their job involves studying the public financial records of companies to determine whether their stock is a worthwhile investment.

Buy-side analysts work for mutual funds, hedge funds, securities firms, banks, insurance companies, and other large investment institutions use their expertise to make investment decisions. Private investors are more familiar with sell-side analysts, who are generally employed by brokerage firms to evaluate companies for future earnings, growth, and other investment criteria. They often specialize in specific sectors such as technology, health, industrial, etc.

An analyst has to be experienced in evaluating not just the company, but the overall industry risks (also known as systematic risk), and the overall market risk. Often the analysis of competing firms and industry trends can prove just as valuable as the actual company’s analysis.

There are some serious controversies involving financial advice that is now being more strongly regulated. Sell-side analysts are often employed by brokerage firms, which earn commissions on investors trading. This creates a strong bias towards analysts recommending investors to buy rather than to sell. TipRanks’ complete database of almost every analyst recommendation ever published since 2009 demonstrates the full extent of this bullish bias. In fact, if we take out the confusing and often uninformative “Hold” recommendations between 2009-2015, we clearly see that 91.5% of analyst recommendations were “Buy” vs a mere 8.5% to “Sell.”

It is important to understand that not all analysts are equal. At TipRanks we take great pride in making the entire financial research industry more transparent and holding analysts accountable for their recommendations.  You can use the Top 25 Analysts page to quickly view the best performing analysts, and subscribe to their real-time alerts for their next recommendation.