How to Become a Stock (Equity) Analyst
Posted by: Kaplan Schweser
Updated February 12, 2019
Stock analysts (often referred to as equity analysts) work in both buy-side and sell-side firms producing research reports, projections, and recommendations about stocks and companies. If you have a love of learning and data analysis, are a skilled problem solver, and are tenacious, you will thrive on this career path. Read on to learn how to become a stock analyst.
Types of Stock (Equity) Analysts
There are two types of stock analysts: buy-side and sell-side analysts.
Buy-side analysts work for fund managers at mutual fund brokers or financial firms. They do research on companies in their employers’ portfolio and other potential company investment opportunities. Buy-side analysts generally have broader responsibilities, such as doing research on larger industry topics like technology.
Sell-side analysts work for large investment banks. They do more narrowly focused research on a list of companies, often in the same industry, and provide reports to the firm’s clients. They build models projecting the firm’s financial results and interview customers, suppliers, competitors, and other sources with firm and industry knowledge. They provide a research report with financial estimates, a price target, and a recommendation about the stock’s expected performance. While buy-side analysts often conduct research on larger industries (e.g., technology), a sell-side analyst will do more focused research within an industry (e.g., software).
The Path to a Stock (Equity) Analyst Career
The path to a stock (equity) analyst career can vary. There are no formal education minimums to become a stock analyst; however, most employers will ask for a bachelor’s degree in a relevant field of study, such as economics, finance, or statistics.
The field is quite competitive to break into, so having a bachelor’s degree from a well-known, top-tier school could give more weight to your application. Getting an internship is another good way to get your foot in the door with a financial firm. It allows you to build a professional network and connect what you’ve learned in an academic setting to a real job.
Many stock analysts earn the CFA® charter in order to distinguish themselves in the industry. The CFA charter requires a large commitment of time and effort. The average candidate studies for at least 300 hours per level (there are three levels). The knowledge gained from the CFA Program, however, is invaluable to a stock analyst. The curriculum goes deep into important topics for equity analysts, including financial analysis and reporting, equity investments, alternative investments, ethics, quantitative methods, corporate finance, and more.
In addition to the CFA charter, many equity analysts get a securities license from FINRA. This licensing requires sponsorship from an employing firm, so most analysts do not get their securities licensing requirements done until they are hired by a firm.
If you like diving deep into research and data, and you have the rigor to succeed in a high-pressure industry, being a stock analyst may be the right fit for you. If you are interested in learning more about the CFA Program, the CFA Program exam, and how you can prepare with Kaplan Schweser, visit our CFA Program page now.