[6] In corporate roles, financial analysts perform budget, revenue and cost modelling and analytics as part of their responsibilities;[10][12][13] credit analysis is likewise a distinct area.
In a stock brokerage house or investment bank, the analyst will[3] read company financial statements - applying financial statement analysis - and analyze commodity prices, sales, costs, expenses, and tax rates in order to determine a company's value and project future earnings.
Typically, at the end of the assessment, an analyst would provide a rating recommending or investment action: to buy, sell, or hold the security.
Usually, financial analysts study a specific industry—called "sector specialists"—assessing current trends in business practices, products, and industry competition.
Analysts must keep abreast of new regulations or policies that may affect the industry, as well as monitor the economy to determine its effect on earnings.
The reporting focuses on the ability of the issuer to make payments—similar to the credit analysis described below—but also on the relative value of the security in question, and in context of the overall market and yield curve.
Analyst performance is ranked by a range of services such as StarMine owned by Thomson Reuters or Institutional Investor magazine.
An additional component of the IB role here: analysts ensure that all forms and written materials necessary for compliance with Securities and Exchange Commission regulations are accurate and complete.
The analysis is somewhat more specialized than for an IPO, as it must consider valuation pre- and post-merger, a function of efficiencies, synergies, or increased market share, financing employed, including M&A specific considerations such as the swap ratio, and tax optimization, both re the transaction and for the new entity.
The latter role incorporates a significant advisory element—guiding the client regarding their profile and exposure in the capital markets, and advising on M&A and other corporate activity [19] (and liaising with sales and trading).
They then typically "standardize" the different companies' data, facilitating peer group analysis: the main objective here is to enable their clients to make better decisions about the investment across different regions.
In general, [9] [5] a business-related bachelor's degree majoring in Accounting, in Finance, or in Economics is a minimum requirement for an entry or junior role.
Given the nature of the work, (some) proficiency in Excel is typically a recommendation (and analysts may be expected to learn database software "on the job");[21][3] see further under Financial Modeling.
[25] More specific qualifications may be required additionally:[9] In securities and IB roles,[6] it is lately preferred that, similarly, even to enter, analysts earn a Master of Finance or the CFA designation—in Europe, the CIIA also—with the MBA still common at senior levels.
For example, in the United States, sell-side or Wall Street research analysts must register with the Financial Industry Regulatory Authority (FINRA).
Other sectors may similarly require specific technical qualifications: e.g. in pharmacy / life sciences for "bio-tech";[33] in electronic engineering for (some) areas in "high tech" (e.g.