What Does a Stock Analyst Do?

A stock analyst follows the movement of publicly traded stocks, analyzing market trends and other drivers that affect stock prices. He or she may also track historical movement in a stock price, with a general goal of assisting his or her employer or clients in buying and selling stocks profitably. Many stock analysts will track not only one stock, but also the equities of other major players in the same industry segment, as these firms' fortunes often impact their competition's market price. Some stock analysts work for one employer, such as a major hedge fund, while others advise multiple clients. A stock analyst will typically generate financial reports about market trends or individual stocks for clients or the firm for which he or she works.

Someone who works as a stock analyst generally looks at a variety of factors that influence stock prices at a given moment. In addition to analyzing fluctuations in a stock's price, a stock analyst usually seeks to uncover how the fundamental market drivers may impact a stock's value over time. This type of work generally requires both mathematical and research skills. An intuitive grasp of how the stock's price may be impacted by the macro economic environment usually proves immensely helpful in this career. Many stock analysts are well versed in the historical performance of the stocks they usually follow.

For example, the stock price of a company that sells seeds to wheat growers may rise if a major seed producer in that niche has a poor yield of starter seed, as the supply available in the market has been reduced. This event might occur due to an unusual meteorological phenomenon. If the stock analyst is following stock developments for companies that produce bread products, he or she may also conduct research in an attempt to forecast how that may affect stock prices for those companies.

The analyst may compare a variety of news reports and earnings reports from companies within that particular industry. He or she may conclude that even though the price for seeds has increased and may depress stock prices for seed stock temporarily, the long-term outlook for the industry is still positive. The analyst may take that data and compare it to individual companies within that sector, reviewing publicly available data on each company.

Instead of following stock prices in an industry, a stock analyst may focus instead on putting together a diverse stock portfolio for a client or a group of investors who are customers of a hedge firm, for example. Since these types of investments usually bridge multiple sectors, the analyst may recommend this strategy for those who seek a diverse financial portfolio. The analyst may conclude that a diverse portfolio will better serve the client, as this type of investment strategy tends to produce smaller swings in value and more consistent performance.