A sell-side analyst works for an investment bank or a

brokerage A broker is a person or entity that arranges transactions between a buyer and a seller. This may be done for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neith ...

firm and evaluates companies for future earnings growth and other investment criteria. Aside from stimulating buying and selling, the reliability of the research will help the client make a better decision. They sometimes place recommendations on

stock Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...

s or other securities, typically phrased as "buy", "sell", or "hold." They offer their recommendations to clients. Buying and selling of securities will produce commissions for the brokerage. When a brokerage is also a

market maker A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the difference, which is called the ''bid–ask spread'' or ''turn.'' Thi ...

for the stock being rated, the analyst might influence the price of shares and the brokerage ultimately reap the benefits.

Conflict of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple wikt:interest#Noun, interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates t ...

charges were filed against some sell-side analysts in 2002 after the

dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...

had collapsed. These inquiries led to SEC enforcement actions against Jack Grubman and Henry Blodget. The performance of sell-side analysts was compared with the results of buy-side analysts. In this study, the outcome was positive for sell-side analysts.Boris Groysberg et al.
''Do Buy-Side Analysts Out-Perform the Sell-Side?''
SSRN, 2005-09-30. Retrieved 2023-07-31. A proper title for some sell-side analysts is Equity or Credit Research Analyst.

References

Financial analysts {{Econ-stub

See also

References