An analyst is a professional usually trained in finance who closely follows specific investments and makes buy/sell recommendations. The analyst is often employed by a broker or major investment house, but some are self-employed doing business as consulting services. Recommendations may be given to clients as a free service, used internally, or offered on a for fee or subscription basis.
Many analysts specialize in certain sectors and attempt to identify the best investment opportunities in those sectors.
Analysts are often criticized for issuing many buy recommendations, but sell recommendations are often muted or delayed.
Those who work for major companies are sometimes accused of recommending stocks of companies who are major customers of the company. Large fees can be paid to the same firms for arranging bond placements, IPOs, and other financing arrangements. A conflict of interest is said to sometimes cause analysts to recommend stocks they feel are likely to be poor performers. A Chinese wall is supposed to exist at these firms separating their retail brokerage activities from their investment banking operations. Increasingly brokers offer independently prepared stock reports to their customers to avoid potential for conflicts of interest.
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