Covering Analyst.

Sell-side research relies on one individual having responsibility for the target price and investment rating on a particular stock. This analyst is known as the covering analyst.

The departments are usually divided up into sectors. However, some sectors are too large for one individual to cover all the stocks in a sector. So instead the analysts will cover a subgroup or sub sector of stocks within this. On this slide, you can see that the bank sector is divided into retail banking, and investment banking, with one analyst covering each sub sector. Each analyst will then be responsible for setting the target price and investment rating for those stocks in their sub sector. The retail banks analyst shown here is the covering analyst for Bank 1, Bank 2, and Bank 3. This doesn't mean that the analyst works alone, they'll usually be supported by a junior analyst although they don't take responsibility for the target price and rating they will be involved in a lot of the data analysis and research. Also, if the research house uses a relative rating system the retail analyst and Investment Bank analyst will need to work closely to identify the appropriate ratings across all of their sector. The covering analyst on a stock has a number of responsibilities firstly they are responsible for regularly maintaining and updating the target price and rating and they are named first on the research note. Secondly, they're required to confirm compliance with regulatory requirements when publishing research. Thirdly, they are usually the go-to person for internal and external clients when there is news flow on a stock and finally they usually have the primary relationship with the companies that they cover. When an analyst becomes a covering analyst for a stock it is referred to as initiating coverage on that stock and when they stop covering the stock it's referred to as having their coverage suspended.