Sell side analyst

Sell side analysts (as opposed to buy side analysts) are employed (usually) by stockbrokers to write investment research that is circulated to clients. Sell side research is usually detailed. Sell side analysts produce complex financial models and forecasts. They usually specialise in a sector or a sub-sector.

The access clients get to research usually depends on how much business they give the brokerage producing the research. It is possible to buy access to some sell side research for a fee, but this is a rarer arrangement as it is usually cheaper to simply switch some business to the broker who produces the research wanted.

Typically, the best clients will be regularly contacted by analysts, updating them on developments and changes in the analysts' views as well. They will also get regular delivery of written research in printed and electronic form. At the other extreme marginal clients will receive a limited amount of published research, have no real access to analysts to ask questions and will have limited (if any) access to other distribution channels such as research web sites.

Sell side research is primarily produced for external users - the brokers clients. It can therefore be widely circulated. It can very influential in changing investors' perceptions and driving share prices.

One of the key problems with sell side research has been its lack of independence. Brokers are usually owned by investment banks which dislike research that upsets clients or potential clients - for example, by criticising a company that may give the bank future advisory work. This is particularly so because part of the traditional function of sell side analysts was to display investment banks' analytical skills and to use their contacts with listed companies to get clients for the far more profitable corporate finance departments.

This problem has been ameliorated by regulators and by banks' wish to improve their reputations. However the problem is far from solved and this remains one reason for employing buy side analysts.

Sell side analysts usually have enormous expertise in the companies and sectors they cover. The forecasts are the most important single product of their detailed financial modelling, but sell side research is very useful because of the depth of information it contains.

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