Why Do Firms Hire Sell-Side Analysts?

    March 03 2021

    Anthony Tan

    Sell-side analysts

    Sell-side analysts are highly regarded in the financial services industry because they are essential sources of intelligence that can drive buying or selling stocks and other instruments. Their role as gatekeepers for reliable and accurate research used by brokerage firms and investment banks to inform their clients’ decisions is critical. By providing timely insights into market trends, sell-side analysts help clients make informed decisions, making their decision process easier. This, in turn, generates more income from commissions over time, and helps maintain valued customer relationships.

    One of the advantages that sell-side analysts have in the stock market is their access to information. They visit companies and engage with them, obtaining vital information that others wouldn’t otherwise get. This unique access allows them unparalleled insight into potential investments, which they offer for sale, giving investors an edge over the competition. Sell-side analysts provide ratings such as strong buy, buy, hold, and sell, which investors rely on to make their investment decisions.

    Access to investment research is a valuable asset that investors can take advantage of, depending on their account details. Clients can unlock expert insights and analysis at no additional cost or by subscription, depending on their brokerage firm’s policies. By utilizing this wealth of knowledge, investors can integrate it into their own research to make informed investment decisions.

    Institutional investors may not always be concerned with an analyst’s ability to accurately predict stock movement. Instead, they may seek the algorithm output generated at any given moment or under a specific scenario. This means that sell-side analysts must not only possess strong analytical and research skills but also stay current with the latest technologies and techniques to meet the needs of their clients. Overall, sell-side analysts play a crucial role in the financial services industry, providing reliable and accurate research that informs investment decisions and helps generate income for brokerage firms and investment banks.

    Some tidbits of how sell-side analysts evaluate companies and make investment recommendations?

    1. Sell-side analysts focus on financial metrics: Sell-side analysts rely heavily on financial metrics such as revenue growth, margins, and earnings per share (EPS) to evaluate companies.
    2. They also look at non-financial factors: In addition to financial metrics, sell-side analysts also consider non-financial factors such as industry trends, competitive landscape, and management quality.
    3. Management meetings are important: Sell-side analysts place a great deal of importance on meeting with a company’s management team. These meetings allow analysts to ask questions and gain insights that are not available from public filings.
    4. Consensus estimates matter: Sell-side analysts pay close attention to consensus estimates, which are the average of all analysts’ forecasts for a company’s financial performance. Consensus estimates are important because they can affect a company’s stock price.
    5. Sell-side analysts have conflicts of interest: Sell-side analysts work for investment banks that have relationships with the companies they cover. This can create conflicts of interest that may influence analysts’ recommendations.
    6. Sell-side analysts are not always accurate: Sell-side analysts’ recommendations are not always accurate, and investors should do their own research before making investment decisions.

     

     

     

     

    Last Updated: March 2026. This article has been reviewed and updated to reflect current market conditions and the latest analyst data available on AnaChart.

    Related Reading

    🔍 See Real Analyst Track Records on AnaChart

    AnaChart tracks 4,000+ Wall Street analysts — see their price target history, accuracy rate, and performance score for any stock.

    Explore AnaChart Free →

    Why Firms Hire Sell-Side Analysts: FAQ

    Why do brokerage firms employ sell-side analysts?

    Analysts produce research, ratings, and price targets that support trading, banking relationships, and corporate access, and that attract and serve institutional clients. Their published targets become a public record of their views.

    How do sell-side analysts make money for their firms?

    Indirectly — through trading commissions, banking business, and client relationships rather than by selling research directly. Their credibility, and therefore their value, rests on being right over time.

    How can I tell which sell-side analysts are actually accurate?

    AnaChart scores each analyst by whether their price targets were met, per stock, so you can separate the consistently accurate analysts from the rest.

    Related on AnaChart: browse the top performing analysts by sector, and compare platforms in AnaChart vs TipRanks.

    For institutional teams: AnaChart’s full analyst price-target and accuracy dataset — every analyst, every target and revision since 2004 — is available warehouse-native through AnaChart Corporate Access, delivered straight into Snowflake or Google BigQuery with no ETL.