Equity research: Should reports provide recommendations?

Equity analysts are in an unenviable position. When asset prices cantered up between 2005 and 2007, they initiated coverage on a large universe of companies. Several of these stocks are currently trading at half their estimated intrinsic value.

Even as analysts are considering revising the estimated values, investors are questioning the efficacy of these reports.

This article discusses the role of equity research and its use for traders and investors.

It argues that analysts would do well to acknowledge the presence of noise traders and the fact that asset prices wander away the estimated intrinsic value.

Acknowledging this fact and stating the same in the report would enable the analysts to add considerable value to the investment process.

Click here for the full story.

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