The term buy-side analyst refers to an individual that evaluates the future earnings and investment quality of companies on behalf of their clients. Buy-side analysts will normally work for hedge funds, pension plans, mutual funds, high net-worth individuals, and other types of non-brokerage investment firms.
Also known as buy-siders, buy-side analysts identify investment opportunities that will increase the net worth of a fund. They do this by providing research reports and investment recommendations to their company's money managers. Buy-side reports are not available for purchase, and their approach to valuing a security is not made public.
The objective of sell-side analysts is to provide valuable insights into a security so the buy-side investor purchases the security from the brokerage firm that employs them. Ultimately, the service they provide is the marketing of securities. Sell-side analysts also specialize in a specific industry and track a limited number of securities.
Buy-side analysts use the information provided by sell-side analysts; combining this information with their own proprietary models. Portfolio managers would then use the buy-side analyst's research reports when making their buy and sell decisions. Buy-side analysts don't specialize to the degree seen on the sell-side. A buy-side analyst might specialize in the securities of a segment of the economy. For example, they might specialize in analyzing technology stocks.