Equity Research Report is a report written by a brokerage or securities firm for its clients as a way to help investors make decisions about where to invest resources.
FINRA, the Financial Industry Regulatory Authority, defines an equity research report, in Rule 2711 (a)(8) as, "a written or electronic communication that includes an analysis of equity securities of individual companies or industries, and that provides information reasonably sufficient upon which to base an investment decision."
Readers of Equity Research Report, more so than anything else, are looking for you to identify trends that make investment decisions easier to justify.
- Step 1
In Equity Research Report Operate on the KISS (keep it simple stupid) principle. It may seem obvious, but portfolio and pension-fund managers do not want to read something they don't understand. If your research has identified a trend or a a buy/sell opportunity, keep the communication simple and easy to understand, but don't be condescending.
- Step 2
Issue the Equity Research Report a timely manner. Late investment advice is of no value.
- Step 3
Concentrate on 5 main areas: 1) the company, 2) the industry, 3) government interest, 4) market interest, and 5) investment ideas for clients. You can find this information in the annual report and official SEC (Securities and Exchange Commission) filings, company press releases, company visits, industry studies, relevant government sources and the press.
- Step 4
In Equity Research Report, Report the basics on the cover. The reader should know, immediately, the reason to read the report. Include a paragraph that gives the client a reason to read your analysis, what investors should think about the stock. What is the investment conclusion? What is new and different from consensus estimates (read: other analysts).
- Step 5
Keep your audience engaged with a clear report design. The report should never be more than 30 pages; always use charts and graphs to support your arguments, and use message headings to help the reader navigate the document. Also edit the text for industry jargon and passive verbs.
- Step 6
Discuss risks. This usually goes at the end of an equity research report, but you are obligated as a research analyst to provide information on the risks involved in taking your advice. Readers expect this section.
