Qualities of a Good Research Report: formula sheet

Key formulas

Initiation report

First coverage → full, detailed report

Covers business, industry, financials, valuation, rating and risks.

Update report

New event or data → shorter report on what changed

Triggered by results, corporate actions or news. Reviews estimates, rating and target.

Sector report

Scope = whole industry

Covers demand, supply, regulation, competition and outlook.

Thematic report

Scope = broad idea across sectors or companies

Example themes: infrastructure, digitisation, consumption.

Quantitative report

Method = data, models, screens and statistics

Conclusions rest on numbers, not mainly on narrative.

Clarity test

Clarity = simple language + logical flow + clear conclusion

Jargon with no explanation or a buried conclusion signals poor clarity.

Objectivity test

Objectivity = view based on evidence + conflicts disclosed

A view shaped by personal interest or pressure, or hidden conflicts, breaks objectivity.

Accuracy test

Accuracy = correct data + checked calculations + reliable sources

Wrong figures or unverified sources break accuracy, even if the view is reasonable.

Timeliness test

Timeliness = latest available information + issued while still relevant

Outdated data or late issue after a major event breaks timeliness.

Consistency test

Consistency = same methods, assumptions and terms throughout

Text, tables and conclusion must agree, and approach should not change without explanation.

Support test

Recommendation = rating or target price + valuation basis + assumptions + risks

A call with no reasoning behind it is unsupported.

Flow of a report

Conclusion → Thesis → Industry and company → Financials → Valuation → Target price → Risks and disclosures

Order may vary by firm. Each part must support the thesis and the target price.

Upside to target price

Upside (%) = (Target price − Current market price) ÷ Current market price × 100

Used in the summary to show expected return and to support the rating.

Target price link

Target price = Forecast metric × Target multiple (for relative valuation)

For example, forecast EPS × target P/E. The multiple and the forecast must both be justified in the report.

Core test of a good report

Clear assumptions + stated valuation method + named data sources + balanced risks = a view the reader can verify

Use this as a checklist when judging answer options.

Target price link

Target price = f(assumptions, valuation method)

Change the inputs or the method and the target price changes. So both must be disclosed.

Fact versus opinion

Reported data ≠ analyst estimate ≠ opinion

A good report labels each one so the reader knows what is verified and what is judgement.

Sensitivity idea

Target price at base, optimistic and pessimistic assumptions

Showing a range of outcomes helps readers see how much the view depends on the assumptions.

Core test of a compliant report

Compliant report = full disclosure + fair and balanced presentation + no misleading content

If an option fails any one of the three, it is usually the wrong answer.

Disclosure principle

Conflict exists → disclose it (and manage it)

Disclosure is the usual requirement. Conflicts are not automatically banned.

Items typically disclosed

Analyst or associate holdings in the subject company + compensation received from it + other relationships (such as investment banking) + whether the analyst is an officer or has a relative who is

Check the workbook for exact thresholds and wording.

Fact vs opinion

Fact = verifiable and sourced; Opinion = judgement, forecast, target price with stated assumptions

Reports must not present opinion as fact.

Prohibited content

No guaranteed returns, no false or exaggerated claims, no omission of material risk

Misleading by omission is still misleading.

Quick revision

• A good report is clear, accurate, objective and supported by data.
• The recommendation must follow logically from the analysis shown.
• Facts and opinions should be kept distinguishable.
• Assumptions behind forecasts must be stated, not hidden.
• The valuation method and its key inputs must be disclosed.
• Risks that could make the view wrong must be disclosed.
• Conflicts of interest and holdings must be disclosed as the regulations require.
• The report should suit its audience and purpose.
• A report is only as good as its data sources, so sources should be reliable and identified.
• Misleading, one-sided or exaggerated content is a failure of quality and compliance.
• Wrong answers cost 25% of the marks assigned, so skip a question only if you are truly unsure.

Common mistakes

• Calling any report on a company an initiation report. Fix: Initiation means the start of coverage. Later reports on the same company after an event are updates.
• Confusing a sector report with a thematic report. Fix: A sector report stays inside one industry. A thematic report follows an idea that can cut across industries.
• Confusing accuracy with consistency. Fix: If a figure is factually incorrect, it is accuracy. If two parts of the report disagree or methods change without reason, it is consistency.
• Treating a positive recommendation as a sign of a good report. Fix: Quality depends on the support behind the call, not its direction. A Buy with no valuation basis is unsupported.
• Treating the company description as the investment thesis. Fix: The thesis is an argument about why the stock will perform. A description only states facts about the business.
• Giving a target price with no valuation method or assumptions. Fix: Remember that the target price comes out of valuation. A good report states the method, key assumptions and the multiple or discount rate used.
• Treating a target price as a fact Fix: Remember it is an estimate that depends on assumptions and method. Both must be disclosed.
• Choosing options that list only positives as a strong report Fix: A good report is balanced. Risk disclosure is a required quality, not a sign of weakness.
• Thinking a conflict of interest means the analyst cannot publish a report. Fix: Remember that the usual rule is to disclose and manage the conflict. Banning applies only where the regulations specifically say so.
• Treating a target price as a fact. Fix: A target price depends on assumptions and is an opinion. Facts are verifiable historical or reported data.

Exam tips

• Questions are usually definitional. Learn one-line scope and trigger for each type.
• Watch for stem words such as 'first', 'after quarterly results', 'whole industry' and 'across sectors'.
• For purpose questions, pick the option about informing clients and supporting decisions, not guaranteeing returns.
• With negative marking, skip a question only if two options still look equal after you check scope and trigger.
• Expect short scenario questions that ask which quality is present or missing. Learn the one-line test for each quality.
• Watch for 'except' and 'least' wording. Negative marking is a percentage of the marks for the question, so a careless wrong answer costs you.
• When two qualities seem to fit, find the root cause: wrong fact is accuracy, conflicting parts is consistency, bias is objectivity.
• Do not pick an option because it sounds professional. Plain, supported and unbiased wins over complex and confident.