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How the Coronavirus Crisis Changed Investment Research, According to the All-America Research Team
Members of the soon-to-be-announced all-star analyst team share how their roles have evolved during the pandemic.
To quote one analyst, working in equity research has gotten “a lot more intense.”
Top research providers in the U.S. and globally have reported a surge in demand for content and corporate access this year, as investors have tried to make sense of the rapid changes brought by the coronavirus pandemic.
These changes have impacted not just the markets but the investment research industry itself. This includes changes in how institutional investors view some of their research providers, as the 2020 All-America Research Team will soon reveal.
Ahead of that reveal on Tuesday, Institutional Investor asked a number of sell-side analysts to share how they’ve been required to adapt and evolve during the Covid-19 crisis.
There are the obvious changes: One airline analyst noted with irony that he traveled a lot less this year. Some pointed to the ability to spend more time with their families. Almost everyone mentioned the increase in virtual communication with clients, corporates, and colleagues.
But’s it’s not just the shift to working from home. This year has also seen an evolution in the kinds and quality of research insights demanded by investors, as numerous analysts pointed out.
“When Covid hit and we were all stuck at home, the market became very uncertain,” one analyst said. “It came down to this: You got to produce great product and you had to dig into the issues that people really cared about.”
Some of the traditional “marketing” elements of the sell-side analyst role, like traveling to meet with companies and investors, are “obviously on hold,” another equity researcher said. “But this provides us with greater opportunities to ‘market’ through more frequent and actionable research calls.”
“The job is less about seeing clients and entertaining clients and more about giving them the analysis they need to make decisions,” another analyst agreed.
For some, the workload has increased significantly. Analysts covering hard-hit and virus-centric sectors have had to make sense of industries completely disrupted by the pandemic, while also analyzing an onslaught of new information and data points.
“Overnight we went from stock analysts to business analysts,” one Hall-of-Fame analyst said. “Essentially you had to take all the work you had done year to date and throw it out.”
For one pharmaceuticals analyst, the Covid-19 pandemic created an entire new category of therapeutics to track, in the form of Covid-19 vaccines and drugs. Even the analysts covering non-healthcare sectors suddenly had to study up on vaccine and drug development.
“It has made me focus on a lot more uncontrollable factors, like politics and vaccine progress — things that are external,” the airlines analyst said. “People don’t want my opinion on politics and vaccine progress; they want my opinions on balance sheets and cash flow — and that’s a secondary consideration right now.”
While some analysts struggled to make sense of the pandemic, others rose to the challenge — and were rewarded with high marks from All-America Research Team voters. As for who proved to be the best research providers of the coronavirus crisis — check back Tuesday to find out.