Security Analyst - Explained
What is a Security Analyst?
Written by Jason Gordon
Updated at March 10th, 2022
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What is a Security Analyst?
A security analyst is a financial professional who is professionally trained to evaluate market security, study different industries and firms, valuate industry inevitability, provide trading recommendations, and provide holding recommendations for investments portfolio using market research.
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What Does a Security Analyst Do?
Security analysts make use of different tools, methods, and strategies in creating valid reports.
These reports help institutional investors, firms, and banks make the best investment moves to maximize profit.
Most clients pay large sums to be able to access these reports.
This is the primary industry of Bloomberg, LLP.
Security analysts make use of fundamental and technical analysis in deterring the pattern of a market or an economy.
When using fundamental analysis, the analyst focuses on financial statements, rate of unemployment, and other monetary reports.
Technical analysis, on the other hand, allows the analyst to determine market price trends and momentum.
These professionals engage in the herculean task of collecting and interpreting financial statements in order to predict the next direction of the market.
These financial reports are sourced from a number of databases like the EDGAR (Electronic Data Gathering, Analysis, and Retrieval), from financial magazines, and by peer-to-peer sharing between two analysts.
Aside from analyzing securities to create reports, security analysts sometimes can be tasked with creating earnings estimates for a firms future earnings per shares (EPS).
Using this analysis, the analyst can create an estimate of fair value for a company stock, which in turn creates a target share price.
The estimates from security analysts are also used as consensus estimates (future predictability of the company's performances) which are used as a target for the firms performances.
Security analysts are expected to be able to interpret data not only by themselves but explain it to clients, peers, and the management under which they work.
Most of these analysts work in investment banks, private equity firms, hedge funds, venture companies, and research firms.
Their knowledge of sector and company analysis make them a crucial part of mergers, acquisitions, restructuring, bankruptcy, and any other process which has an influence over a company financially.
