Switching to a Career in Equity Research with a STEM PhD
Posted On March 12, 2020
Since Equity Research is becoming a more common career trajectory for PhDs from the STEM fields, we chose to do a little digging through our own interviews, reading, and networking to find out more about the job and what it entails and how to make yourself better prepared. Talking to people at UBS, Jeffries, Piper Sandler, and Citi, here’s what we found.
This change from your STEM PhD into Equity Research is a common pivot. As an ER you can focus on the Buy or Sell side working for a bank. The entry level position is an Associate and the career path works its way up to Senior Associate, Analyst and Senior Analyst. The specialization for the career, make PhDs a great fit and hire. Specialties are in Biotech, Healthcare, and Tech.
Typically, the career moves from working 1 to 2 years as an Associate with good pay. Then, you can get promoted as a Senior Associate, with a bit more responsibility and have more of a say in some of the reports and positions. At this point, you’re financial modeling skills are stronger and you’re able to turn around news a lot faster.
As an ER Associate you get exposure to C-suites of the companies you cover. You can imagine the impact on your rolodex.
At any given time, you can be covering 12 to 15 different companies keeping up on all their news, pipeline research, factors that influence their funding, FDA regulations, etc. You’ll be analyzing this and feeding it into your models.
A Day in the Life
A typical day of an ER Associate is to wake up at about 5:30am, get in a quick workout, commute into work, get to the office by 6:30/7am and read all the news on the way in or immediately when you’re in the office. Get the news and turn around reports immediately on anything that you have a meeting on right away. A good ER Associate can digest the news and not just summarize but also give a fast take on what it means. The day can be incredibly busy if more of your companies in your portfolio are having news breaks happen during morning. Lunch is typically eaten at your desk as you cruise through more work. The day can end at 6pm, however, if a newsbreak comes out late in the day or like quarterly earnings reports, data comes out late in the day leading to reports needing to be turned around. A more detailed day in the life can be found here – Day in the Life.
How to get a jump start?
Valuation of Biotech and Healthcare companies is complex and there sometimes is not a singularly good model, as many factors can come into play with making a stock price a buy or a sell or right valuation. Since valuation is so specific for this industry, those interested in switching should buy: Valuation in Life Sciences: A Practical Guide (Buy on Amazon).
Most positions are in New York City, with some in Boston, MA.
For those who are self-starters with analytical and writing skills
What makes a PhD an attractive candidate for this position is the fast-learning, fast-digesting of data, fast-modeling and clarity of communicating in multiple forms – writing reports, speaking, and emailing. Perhaps, above all, the self-starter attitidue and mindset and the willingness to put in the time is the most attractive quality to a biotech company.
Although its mostly a numbers game on applying, the positions are attainable and are frequently hiring with plenty job listings. Biocareers has a good post about digesting a job posting – see the article here.
Getting Ready to Apply
To increase your job readiness for yourself and for future employers it’s good to start by preparing a Stock Pitch, as well as begin considering taking the Securities Industries Essentials (SIE). The SIE can be studied for in about 2 months and the test is 75 questions. Securities Training Corporation (STC) puts together the best guide for studying. Kaplan also has one, however, most industry professionals prefer the STC guides as the test questions are closer in style to the actual exam. Here is a link to the STC guides.
In summary, ER is a great career path. If you are interested in the stock market and securities and analysis, then this is a great path for you. The coverage can be fascinating can lead to many great paths in pharma and biotech. There are many positions that require a few years of experience in ER. The time it takes and the dedication to make this career work and a success for you will make you a swiss army knife for any job and open up amazing opportunities. The connections are endless and the work is fun and interesting.
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