Stock analysts are the toll-takers on the bridge that links companies to potential investors. They examine a company's performance and prospects and give it either a thumbs-up or thumbs-down. They compete 24/7 against the market and each other, tracking their buy and sell recommendations against industry averages and company stock performance.
If they beat the market consistently, they achieve star status. If they get it consistently wrong, they're out the door.
There are two types of analysts -- sell side and buy side. Each follows specific companies or business sectors. Sell-siders are short-term players, focusing primarily on predicting performance for the next quarter. They provide grist for brokers, the industry's salesmen.
"Their goal is to churn, to encourage people to buy and sell," says Steven Gates, principal researcher for The Conference Board in Paris and a former investment and securities analyst.
In contrast, buy-side analysts work for organizations that manage stock funds or other large pools of investments. They perform similar functions as their sell-side counterparts, but since their funds may hold investments longer, they may take a longer view and enjoy more time for their recommendations to pan out.