Research reports are formal documents prepared by professional equity analysts that offer recommendations concerning specific securities for investors, such as buying, selling, or holding. Additionally, these reports present supplementary information, which includes an overview of the company and its industry, financial metrics, target prices, time frames, and associated risks.
Types of research reports
- Initiating a coverage report where a new stock idea is released
- Sectoral report that covers updates of a sector
- The economy report discusses key economic indicators such as inflation, gross domestic product (GDP), interest rate, index of industrial production (IIP)
- Quarterly results report updates on the quarterly performance of the companies released at the end of each quarter.
- Special reports are released when some extraordinary events throw investment opportunities. The events can be positive and negative, about new formulas or inventions, buybacks, hive-offs, mergers and acquisitions, key personnel resignations, strikes, etc., that will affect stock prices.
Purpose of Research Reports
The primary purpose is to provide company recommendations and ratings based on their business and financial health analysis. Analysts determine the intrinsic or fair value (target price) to guide investment decisions and highlight associated risks.
Types of Ratings:
- Buy Rating: Indicates expected short- to medium-term stock price increases.
- Strong Buy: Very positive outlook.
- Outperform: Expected to exceed market benchmarks.
- Sell Rating: Indicates expected stock price declines.
- Strong Sell: Significant expected drop.
- Underperform: Expected to lag behind benchmarks.
- Hold Rating: Indicates performance in line with the market, suggesting no buying or selling. -
- Neutral: Neither positive nor negative.
- Equal: Expected average sector returns.
Contents of a Research Report:
- While formats vary, reports typically include visual content, data in tabular form, and structured analysis.
