Some people believe that analysts have too much power, others point out conflicts of interest analysts face today. Whatever the reason, it is important that all investors understand the different categories of analysts and what motivates each analyst's recommendations.
Types of analysts
Buy-Side
Buy analysts to work on large institutional investment firms, such as mutual funds, hedge funds or insurance companies. They provide recommendations for the securities accounts can be found by employers. These analysts focus on research in specific sectors or securities that are of interest to an investment firm. These reports are for internal use.
Sell-Side
Usually used by brokers and investment banks, sell-side analysts are part of the retail investment division. Their recommendations and ratings are created to sell an investment and usually free to customers of the brokerage firm. The reports issued by sell-side analysts are often more detailed and precise than those of the buy-side analysts.
Independent
These analysts are not employees or associated with specific brokerage firms or fund companies. Independent analysts aim to provide impartial and objective assessments. Independent analysts receive compensation from companies doing research, called the research unit prices, and reports available by subscription.
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