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Analyst-Driven Methodology

Firms that take an analyst-driven approach have experts review market conditions and data as well as company information to create a recommendation. Typically, research firms have an approach or model that they use as a starting point for analysis to ensure a degree of consistency across multiple analysts.

The advantage of following a firm that has analyst-driven research is in the flexibility and insight that an individual can bring to the analysis. Critical market news or other developments that might be important to the future price of a stock generally won't be included in pure quantitative models. For example, consider a pharmaceutical company that has a critical drug review pending with the FDA. An analyst would typically review and discuss the potential impact of that upcoming drug and include that analysis in making a recommendation. Finally, another reason people use analyst-driven research is for the quality of the writing and insight that only a person can really bring to this work.