What do financial analysts do in a company?


If you have ever tried to read a recommendation report on any value, you should be familiar with the most used classifications by analysts such as: Buy, overweight, maintains underweight and sell. For some it may be an excess in terminology since most investors only want to know if an action is "good" or not, that is, if it will obtain a better result than the evolution of the market.

An analyst is a financial professional who first of all does a research work on different investments to conclude with the recommendations. Most people tend to think that the financial analyst only examines stocks ... Well, no; analysts also focus on currencies, commodities, bonds and even financial derivatives,

Analyst’s release their conclusions in research reports, which can range from one- or two-page summaries to detailed documents that are included in dozens of pages. A report from analyst’s will generally contain the following elements:
  1. A detailed description of the company and its industry.
  2. An approach through a dogmatic thesis that explains why the analyst believes that the company will succeed or just the opposite.
  3. A target price for the shares during the next year (or two).
  4. A recommendation.

Most analysts put a lot of effort into these reports, often travelling to the company headquarters to meet with the CEO or the management team and get a sense of the company first-hand.

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Financial Analysts work is contained in the body of the research report; however, the recommendation gets most of the attention from the investors. It is easy to understand why ... Ratings are the final, attractive sound conclusion that can easily be repeated in financial media. Also, most investors do not have the time to sit down and read through a 20 page report.

The problem is that the scales of grades are not uniform for analysts. That is, "buy" may be the strongest recommendation in one of a broker, while with another "buy" broker it may be placed second in the "strong purchase" recommendation. The second highest recommendation can also be found with a series of different other names: "accumulate", "moderate purchase" or "overbought". A similar mix of terms appears further down the scale, as the scores become more negative. Finally, some financial intermediaries at the time of making the recommendations use a number system to indicate their classification in an action that gives a clearer vision to the investor.

But you have to be careful when you tell us to buy, buy and buy. Conflicts of interest are obvious in this industry. The bad news for investors is that being on the side of investment banking is very lucrative for analysts. In the investment banking, different corporate operations are carried out. so a bad recommendation can diminish on the company and therefore, on the relationship with an investment bank. You can also take help from financial experts like Mark Attanasio Hillcrest and Donato Sferra Toronto who are working as Financial Services Executive in Toronto and has helped many business owners.

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