Q: Why should a copany pay for research services?

A: Having estimates and research published, gives the company visibility to investors. For an investor to assess the attractiveness of the shares of a company for purchase, the more information available, the easier it is to reach a decision. The outlook, estimated sales and earnings, an analysis of industry trends, valuation comparisons and assumptions are highly useful when coming from an informed third party.

Q: Isn’t research that is paid for by the company considered somehow less valid or tainted?

A: This is a tough one to answer because we’re all led to think that fee based research is less “pure”. But importantly, it establishes a baseline against which results can be compared and in the final analysis, good research stands up while promotional research doesn’t. Further, a research firm that retains independence over the conclusion and rating furthers the credibility. Reputation is critical. Winning ideas are crucial.

Q: Will paying for research to be written on a company increase the stock price?

A; With the drop in the number of analysts in recent years, studies show a decline in valuations directly related to the loss of research coverage. Well written research can help to define good investment opportunities, which gives in turn investors confidence to buy and hold a given security. 

Q; What should I look for from firms that provide paid for research?

A: Reputation is foremost.  Select the anallyst that has the track record and name recognition that adds to your market visiblity. Look at the quality of the written material. 

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