1.

“Hold” Rating → The third rating, a “Hold”, is fairly straightforward as it indicates that the analyst

concluded that the projected performance of the company is in line with either its historical trajectory,

industry comparable companies, or the market as a whole. In other words, there is a lack of a catalyst event

that could cause a substantial swing — either up or down — in the share price. As a result, the

recommendation is to continue to hold and see if any notable developments emerge, but regardless,

continuing to hold the stock not too risky and minimal volatility in pricing should be anticipated in theory.

In addition, two other common ratings are “Underperform” and “Outperform”.

1. “Underperform” Rating → The former, an “Underperform”, indicates the stock may lag behind the

market, but the near-term slowdown does not necessarily mean that an investor should liquidate their

positions, i.e. a moderate sell.

2. “Outperform” Rating → The latter, an “Outperform”, is a recommendation to buy a stock because it

appears likely to “beat the market.” However, the anticipated excess return above the market return is

proportionally minor; hence, the “Buy” rating was not offered, i.e. a moderate buy.

Sell-Side Equity Research Report Anatomy

A full equity research report, as opposed to a short one-page “note”, usually includes:

1. Investment Recommendation: The equity research analyst’s investment rating

2. Key Takeaways: A one-page summary of what the analyst thinks is about to happen (ahead of an earnings

release) or his/her interpretation of the key takeaways from what has just happened (immediately after the

earnings release)

3. Quarterly Update: Comprehensive detail about the preceding quarter (when a company has just reported

earnings)

4. Catalysts: Details about the company’s near-term (or long-term) catalysts that are dev