What Is a Research Analyst? What They Do and Qualifications

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A research analyst is a finance professional who studies securities, companies, industries or other assets and turns that work into reports for their own firm or for outside clients. The reports usually end with a view on the investment: a rating such as buy, sell or hold, a price target, or a judgment on whether the asset fits a portfolio’s strategy. Other titles for the same role include securities analyst, investment analyst, equity analyst, rating analyst, or simply “analyst.”

What Does a Research Analyst Do?

The job is to find, check and revise facts and assumptions about an investment, then explain what they mean for its value. A typical workflow looks like this:

1. Gather data. Annual and quarterly filings, earnings calls, industry statistics, economic data and management guidance.
2. Build a model. A spreadsheet that forecasts revenue, margins, cash flow and earnings over several years.
3. Value the asset. Methods include a discounted cash flow (DCF) model, multiples such as EV/EBITDA built on enterprise value, and comparisons with peers on measures like return on equity.
4. Form a view. Compare the estimated value with the market price and decide on a rating or recommendation.
5. Publish and defend it. Write the report, present it to portfolio managers or clients, and update it as new results or news arrive.

Research analysts work at asset managers, investment banks, brokerages, hedge funds, pension funds and insurance companies. The title also appears outside finance, at consulting firms, think tanks and corporations, where a research analyst may study markets, customers or policy rather than securities.

Buy-Side vs. Sell-Side Research Analysts

Buy-side analysts work for institutional investors that buy securities with their own or their clients’ money, such as mutual funds, hedge funds and pension funds. Their research goes to the fund’s portfolio managers. The question they answer is how promising an investment looks and how well it fits the fund’s strategy. Their reports are usually internal and not published.

Sell-side analysts work for investment banks and brokerage firms. Their research is distributed to the buy-side, sometimes sold and sometimes provided free to clients as a way to win trading or banking business. Sell-side analysts publish ratings such as “strong buy,” “outperform,” “neutral” or “sell,” along with price targets and earnings estimates.

Because sell-side research supports a firm’s wider business, it can be used to promote companies, and the role is sometimes compared to marketing. Sell-side jobs can also pay more. Buy-side research tends to be viewed as more independent because the analyst’s only client is the fund’s own investment decisions.

Example of a Research Analyst’s Work

Hypothetical example, for illustration only. An equity analyst covers a mid-size industrial company whose shares trade at $50. After building a five-year forecast, the analyst runs a DCF using a weighted average cost of capital (WACC) of 9% as the discount rate and arrives at a fair value of $60 per share. A peer comparison on EV/EBITDA gives a similar range.

The implied upside is:

Implied upside = (Price target − Current price) ÷ Current price

($60 − $50) ÷ $50 = 20%

If the firm’s rating policy calls for “outperform” when expected upside exceeds a set threshold, the analyst issues that rating. If the company later cuts guidance, the analyst revises the forecast, the target and possibly the rating. The result depends entirely on the assumptions: a 10% WACC or slower growth could drop the fair value below the current price and flip the conclusion.

Research Analyst Qualifications

There is no single required credential, but most paths share these elements:

• Education. A bachelor’s degree in finance, economics, accounting, mathematics or another business-related field is typical. Some employers ask for a master’s degree in finance.
• CFA designation. The Chartered Financial Analyst program, run by the CFA Institute, covers valuation, financial reporting, portfolio management and ethics. It is widely sought by investment analysts and is sometimes required.
• FINRA registration. Analysts at a FINRA member firm who prepare research reports may need to register as research analysts under FINRA Rule 1220 and pass the Series 86 (analysis) and Series 87 (regulations) exams. Depending on the role, firms may also require the Series 7 general securities representative license and the Series 63 uniform securities agent state law exam.
• Technical skills. Excel for organizing data and building models; R or Python to automate analysis, run regressions and visualize data; SQL to pull data from large databases.
• Communication. Strong math and statistics matter, but so does writing clear reports and defending conclusions to skeptical portfolio managers or clients.

Entry usually starts with an associate or junior analyst role supporting a senior analyst who covers a sector. Over time, the analyst takes on their own coverage list.

Research Analyst Salary

Pay varies widely by firm type, city, sector and seniority, and bonuses can be a large part of compensation on both the buy side and sell side. One salary aggregator, as of April 2025, put the average base salary for a research analyst at about $101,000, with a typical range of roughly $76,000 to $136,000. Those figures blend many employers and job levels, including non-finance research roles.

Financial Analyst vs. Research Analyst

U.S. firms do not use either title consistently, and the job description matters more than the title. Broadly, the difference lies in emphasis:

• Financial analysts tend to work from business valuation and economic principles, analyzing investments and market performance to make recommendations that, at senior levels, are often judgment-driven.
• Research analysts lean more on quantitative models and historical data, aiming for answers that can be reproduced from defined inputs. In securities work their recommendations may follow predetermined criteria such as a firm’s rating thresholds.

Limitations of Research Analyst Work

Conflicts of interest. Sell-side research sits inside firms that also earn fees from trading and investment banking. After the dot-com era, the 2003 Global Research Analyst Settlement between regulators and major Wall Street firms required separation of research from banking. The SEC’s Regulation Analyst Certification requires analysts to certify that reports reflect their personal views, and FINRA rules require disclosure of conflicts. These rules reduce conflicts but do not remove the incentives behind them.

Ratings are not standardized. One firm’s “outperform” may correspond to another firm’s “buy,” and the thresholds behind each label differ. A rating means little without the firm’s definitions and the price target attached.

Models depend on assumptions. As the example shows, a small change in inputs can reverse a conclusion, and forecasts can lag fast-moving news.

Coverage gaps. Analysts concentrate on companies their firm can serve or trade, so smaller companies may receive little or no research.

Is Being a Research Analyst Stressful?

It can be. Earnings seasons are especially busy, since analysts may need to update models and publish notes on many companies within days. Sell-side analysts also face public scrutiny when their calls prove wrong.

FAQs

The Bottom Line

Investors reading analyst reports and people considering the career both benefit from knowing how the role works. A rating carries meaning only alongside the firm's definitions, the price target and the assumptions behind the model, and sell-side research can carry conflicts that regulations reduce but do not remove. Candidates typically start as junior analysts, often with a finance degree, CFA progress and strong modeling and writing skills.