Equity Research Interview Questions: Complete Guide
Master equity research interviews. Learn stock pitches, valuation, industry analysis, and modeling with 20+ questions and interactive practice.
Equity research is the foundation of the investment world. Research analysts at investment banks (sell-side) and asset managers (buy-side) analyze companies, build financial models, and make recommendations that drive billions of dollars in investment decisions.
If you're interviewing for equity research roles, you'll need to demonstrate three core competencies: valuation expertise, industry knowledge, and the ability to form and defend investment views. This means having strong technical skills, but also the judgment to synthesize information and make calls.
What Makes Equity Research Different
Unlike investment banking (advising on transactions) or private equity (investing firm capital), equity research is about providing investment insights to clients or internal portfolio managers. You must be right more often than wrong, communicate clearly, and defend your views under pressure.
1. Equity Research Fundamentals
What Does an Equity Research Analyst Do?
Equity research analysts are professional stock pickers. They analyze companies in specific sectors, build financial models, write research reports, and make buy/hold/sell recommendations.
Day-to-Day Responsibilities
| Term | Definition | Note |
|---|---|---|
| Financial Modeling | Build and update 3-statement models for covered stocks | Quarterly updates after earnings |
| Company Analysis | Attend earnings calls, read filings, track competitive dynamics | Deep sector expertise required |
| Report Writing | Publish research notes, initiation reports, earnings updates | Clear communication essential |
| Client Interaction | Field calls from institutional investors, present at conferences | Sell-side only—buy-side internal |
Sell-Side vs Buy-Side Research
Sell-Side vs Buy-Side Equity Research
| Aspect | Sell-Side (Banks) | Buy-Side (Asset Managers) |
|---|---|---|
| Coverage | 15-25 stocks per analyst | 5-10 stocks per analyst |
| Research | Published for external clients | Proprietary, internal only |
| Ratings | Public (Buy/Hold/Sell) | No public ratings |
| Compensation | Commissions + banking revenue | Fund performance |
| Depth | Broad coverage, less depth | Fewer stocks, much deeper |
| Independence | Banking conflicts | More independent |
Test Yourself
Interview Question
Which statement correctly describes a key difference between sell-side and buy-side equity research?
Understanding the differences between sell-side and buy-side research will help you position your interest and prepare appropriately.
2. Valuation Methodologies
Equity research analysts must master multiple valuation approaches and know when to apply each one. No single method is always correct—you triangulate across methods to determine fair value.
The Three Core Valuation Methods
Valuation Framework
1. Comparable Company Analysis (Trading Comps)
Value based on multiples of similar public companies
• Most common: EV/EBITDA, EV/Revenue, P/E
• Reflects current market sentiment
• Good for: Companies with clear peer groups
2. Precedent Transaction Analysis
Value based on M&A multiples paid for similar companies
• Includes control premium (20-40% above trading comps)
• Reflects strategic value
• Good for: Acquisition scenarios, take-private analysis
3. Discounted Cash Flow (DCF)
Value based on PV of future cash flows
• Most theoretically sound (intrinsic value)
• Sensitive to assumptions (WACC, growth, terminal value)
• Good for: Predictable businesses, long-term value
Test Yourself
Interview Question
You're valuing a high-growth SaaS company with recurring revenue but currently unprofitable. Which valuation method is MOST appropriate?
Test Yourself
Interview Question
When would you rely more heavily on DCF valuation vs comparable company multiples?
Target Price = (Weighted Average of: DCF, Comps, Precedents)Most equity research analysts triangulate across methods, weighting based on reliability and company characteristics.
When to Weight Each Method
Weight DCF heavily when:
- Stable, predictable cash flows (utilities, consumer staples)
- Unique business model with few comparables
- Long-term transformation story
Weight Comps heavily when:
- Strong peer group with similar business models
- Cyclical industry (current market pricing matters)
- Uncertainty makes long-term forecasts unreliable
Weight Precedents when:
- Analyzing potential acquisition targets
- Recent M&A activity in the sector
- Strategic value likely (synergies, consolidation)
3. The Stock Pitch: Your Interview Centerpiece
Nearly every equity research interview will require you to pitch a stock. This is your chance to demonstrate analytical thinking, communication skills, and investment judgment all at once.
Stock Pitch Structure
A strong stock pitch follows a clear structure and can be delivered in 5-7 minutes. Quality over quantity—focus on your strongest points.
Test Yourself
Interview Question
In a 7-minute stock pitch, which component should take the MOST time?
The Perfect Stock Pitch Formula
1. Quick Intro (30 seconds)
Company name, ticker, what they do, market cap. One-sentence investment thesis.
2. Investment Thesis & Catalysts (3-4 minutes)
WHY is this mispriced? WHAT specific catalysts will drive re-rating? WHY now?
3. Valuation (1-2 minutes)
Target price, methodology, key assumptions, expected return and timeframe.
4. Risks (1 minute)
Top 3-4 risks to your thesis. Shows balanced thinking.
5. Conclusion (30 seconds)
Restate thesis. Strong, confident close. Expected return.
Common Stock Pitch Mistakes
- Too much company history: Interviewer can read the 10-K
- Vague thesis: 'Strong business' isn't a catalyst
- No clear catalyst: Need specific triggers with timing
- Unrealistic valuation: '10x in 6 months' kills credibility
- Ignoring risks: Shows you haven't thought it through
- Getting lost in spreadsheet details: Focus on investment insight, not formulas
You should have 2-3 stock pitches prepared: a long, a short, and ideally one in the sector you're interviewing for. Practice delivering them until they're natural—you'll likely be interrupted with questions, so be flexible.
4. Industry Analysis & Sector Expertise
Equity research analysts are sector specialists. You need to understand not just individual companies, but the entire industry ecosystem—competitive dynamics, regulatory environment, key metrics, and market trends.
Sector-Specific Metrics
Every industry has key performance indicators that matter more than generic metrics. Knowing these shows you understand the sector.
Key Metrics by Sector
| Term | Definition | Note |
|---|---|---|
| Retail | Same-store sales (SSS), inventory turns, sales per square foot | Organic growth vs new stores |
| SaaS/Tech | ARR, net dollar retention, CAC payback, rule of 40 | Growth + margins ≥ 40% |
| Banks | Net interest margin (NIM), efficiency ratio, loan-to-deposit | Profitability and risk |
| REITs | FFO, same-property NOI, occupancy rates, cap rates | Cash generation metrics |
| Airlines | RASM, CASM, load factor, available seat miles (ASM) | Revenue and cost per seat |
| Pharma/Biotech | Pipeline value, patent expiries, R&D productivity | Future revenue drivers |
Test Yourself
Interview Question
You're covering the retail sector. A company reports 5% same-store sales growth. What additional information do you MOST need to assess if this is good or bad?
Building Sector Expertise for Interviews
If you're interviewing for a specific sector (e.g., healthcare group):
- Read 3-5 recent research reports from top analysts in that sector
- Study the largest companies' recent earnings transcripts
- Understand current industry debates and controversies
- Know recent M&A activity and IPOs in the space
- Have views on 2-3 stocks in that sector
- Understand regulatory environment if applicable
5. Analytical Rigor & Quality of Earnings
Great equity research analysts are skeptical. They don't accept management narratives at face value—they dig into filings, question assumptions, and assess quality of earnings.
Questioning Management Metrics
Test Yourself
Interview Question
During an earnings call, management says 'we delivered strong adjusted EBITDA growth of 15%.' What should be your FIRST reaction as an analyst?
Red Flags in Financial Reporting
- Large gap between GAAP and non-GAAP: What are they hiding?
- 'One-time' charges every quarter: If it's recurring, it's not one-time
- Growing receivables faster than revenue: Channel stuffing?
- Declining cash flow despite earnings growth: Quality of earnings issue
- Frequent restatements: Accounting problems
- Related party transactions: Conflicts of interest
6. Research Report Writing & Communication
Your analysis is only valuable if you can communicate it clearly. Equity research reports must be concise, actionable, and address what clients care about.
Test Yourself
Interview Question
You're writing a research report after earnings. The stock is down 8% in after-hours. Your model shows fair value unchanged. What should your report emphasize?
Elements of a Strong Research Report
Executive Summary (First Page):
- Rating, target price, key thesis in 3-4 bullets
- Clients should understand your view in 30 seconds
Investment Thesis (2-3 pages):
- Why you have this view
- What's misunderstood or mispriced
- Specific catalysts with timing
Valuation (1-2 pages):
- Methodology and key assumptions
- Sensitivity analysis
- Comparison to peers
Risks (1 page):
- What could go wrong
- Shows balanced analysis
Financial Model (Appendix):
- Detailed forecasts and assumptions
- For clients who want to dig deeper
Key Takeaways
Key Takeaway
- Prepare stock pitches: Have 2-3 ready (long, short, sector-relevant)
- Master valuation: Know when to weight DCF, comps, or precedents
- Develop sector expertise: Understand key metrics and competitive dynamics
- Be skeptical: Question management narratives and adjusted metrics
- Communicate clearly: Your analysis is only valuable if clients can understand it
- Think independently: Have conviction in your views and defend them
Common Interview Mistakes
- Generic stock pitches: 'Good business' isn't a thesis
- No sector knowledge: Can't speak intelligently about industry trends
- Parroting management: Not showing analytical independence
- One-dimensional valuation: Using only DCF or only comps
- Poor communication: Can't explain your thinking clearly
Continue Your Equity Research Interview Prep
Build on these fundamentals with these related guides:
- Walk Me Through a DCF — Master the most important valuation methodology for equity research
- Enterprise Value vs Equity Value — Essential for understanding which multiples to use when
- How the 3 Financial Statements Link — Foundation for building financial models
- Hedge Fund Stock Pitch Framework — Advanced stock pitch structure and techniques
- EV/EBITDA Multiple Explained — The most common valuation multiple in equity research