> ## Documentation Index
> Fetch the complete documentation index at: https://financecontext.com/llms.txt
> Use this file to discover all available pages before exploring further.
# initiating-coverage
> 5-task workflow for creating institutional-quality equity research initiation reports (30-50 pages)
## What is Initiating Coverage?
**Initiating coverage** is the process of publishing a comprehensive, first-time research report on a company. It is the most substantial piece of work an equity research analyst produces -- typically 30-50 pages covering everything an investor needs to know: the business model, competitive position, financial projections, valuation, and an investment recommendation with a price target.
At major sell-side banks, initiating coverage is a significant commitment. It means the firm is publicly stating that an analyst will follow this company going forward, producing quarterly earnings updates, maintaining a financial model, and fielding client calls. The initiation report sets the foundation for all future coverage -- it is the "textbook" that clients (portfolio managers at mutual funds, hedge funds, pension funds) will reference.
The format follows institutional standards established by firms like JPMorgan, Goldman Sachs, and Morgan Stanley: a cover page with rating and price target, an investment thesis section, a detailed company overview ("Company 101"), financial analysis with projections, valuation analysis, and appendices. Reports are distributed to hundreds of institutional investors simultaneously and can move a stock's price on publication day.
## Why It Matters
Initiating coverage is a big deal for several reasons:
* **Market impact**: An initiation from a major bank can move a stock 2-5% on publication day, especially for mid-cap and small-cap names where research coverage is limited
* **Client value**: Institutional investors pay for research (explicitly through commission sharing or implicitly through trading). A high-quality initiation demonstrates the analyst's expertise and justifies client payments
* **Analyst reputation**: Initiation reports are how analysts build their franchise. Consistent, high-quality initiations lead to Institutional Investor rankings, which drive compensation and career progression
* **Information foundation**: Every subsequent earnings update, thesis revision, and client interaction references the initiation report. Getting it right from the start matters
## Key Concepts
| Term | Definition |
| -------------------------- | -------------------------------------------------------------------------------------------------------------- |
| **Price Target** | The analyst's 12-month estimate of fair value for the stock, derived from valuation analysis |
| **Rating** | Buy/Hold/Sell (or Overweight/Equal Weight/Underweight at some firms) |
| **DCF** | Discounted Cash Flow -- a valuation method that projects future cash flows and discounts them to present value |
| **Comparable Companies** | Valuation by comparing the company's multiples (P/E, EV/EBITDA) to similar public companies |
| **Precedent Transactions** | Valuation by analyzing what acquirers have paid for similar companies in M\&A deals |
| **Football Field** | A horizontal bar chart showing the range of implied valuations from each valuation method |
| **Sensitivity Analysis** | Testing how the valuation changes under different assumptions (growth rate, discount rate) |
## How It Works
This skill operates in **single-task mode**. Each task produces a verified deliverable before the next begins. Tasks 1 and 2 can run in any order; Tasks 3-5 have strict prerequisites.
```
Task 1 - Company Research ──┐
├──> Task 4 - Charts ──> Task 5 - Report
Task 2 - Financial Modeling ──┼──> Task 3 - Valuation ──┘
│
Tasks 1 and 2 can run in parallel
```
**This skill operates in single-task mode only.** When the user requests a full pipeline, the skill presents the 5-task menu and asks which task to start with. It never chains tasks automatically.
**Why this matters:** Before you can value a company, you need to deeply understand what it does, how it makes money, who runs it, and what threatens it. This is the qualitative foundation for everything that follows.
**Output:** 6,000-8,000 word research document covering company overview and history, management bios (300-400 words each for 3-4 executives), products and services analysis, industry overview, competitive analysis (5-10 competitors), TAM sizing, and risk assessment (8-12 risks across 4 categories).
**Prerequisites:** None -- fully independent.
**Why this matters:** A financial model translates your qualitative understanding into quantitative projections. It is the backbone of your valuation and price target. Without a model, you have an opinion but not an actionable investment recommendation.
**Output:** Excel model with 6 tabs: Revenue Model (product + geography breakdown), Income Statement (40-50 line items, 3-5 years historical + 5 years projected), Cash Flow Statement, Balance Sheet, Scenarios (Bull/Base/Bear), and DCF Inputs.
**Prerequisites:** Access to company financial data (10-K from EDGAR, or pre-extracted financials).
**Why this matters:** Valuation is how you arrive at a price target. Using multiple methods (DCF + comparable companies + precedent transactions) provides a range that increases credibility. The "football field" chart showing this range is one of the most-referenced visuals in equity research.
**Output:** 4-6 page valuation document with DCF analysis, sensitivity tables, comparable companies (5-10 peers with statistical summary), precedent transactions, valuation football field, price target, rating, and key catalysts. Also adds 4 Excel tabs (DCF, Sensitivity, Comps, Valuation Summary) to the Task 2 model.
**Prerequisites:** Financial model from Task 2.
**Why this matters:** Charts make complex financial data digestible at a glance. A portfolio manager scanning 20 reports will look at charts first and text second. Professional-quality charts also signal analytical rigor.
**Output:** 25-35 professional charts (PNG, 300 DPI) packaged in a zip file with a chart index. Includes 4 mandatory charts: revenue by product (stacked area), revenue by geography (stacked bar), DCF sensitivity (2-way heatmap), and valuation football field (horizontal bars).
**Prerequisites:** Tasks 1, 2, and 3 all complete.
**Why this matters:** This is the final, client-facing deliverable. It must meet institutional publication standards -- professional formatting, consistent styling, charts interspersed with text, clickable hyperlinks, and rigorous sourcing. A poorly formatted report undermines even excellent analysis.
**Output:** 30-50 page DOCX report with 10,000-15,000 words, 25-35 embedded charts, 12-20 tables, professional formatting, and clickable hyperlinks.
**Prerequisites:** ALL previous tasks complete.
## Deliverables Summary
| Task | Deliverable | File |
| ---- | ------------------------------------------------------- | ----------------------------------------- |
| 1 | Research document (.md) -- nothing else | `[Company]_Research_Document_[Date].md` |
| 2 | Financial model (.xlsx) -- nothing else | `[Company]_Financial_Model_[Date].xlsx` |
| 3 | Valuation analysis (.md) + 4 Excel tabs -- nothing else | `[Company]_Valuation_Analysis_[Date].md` |
| 4 | Charts zip file (.zip) -- nothing else | `[Company]_Charts_[Date].zip` |
| 5 | Final report (.docx) -- nothing else | `[Company]_Initiation_Report_[Date].docx` |
## How to Add to Your Local Context
```bash theme={null}
# Install the plugin
claude plugin install equity-research@financial-services-plugins
```
**Customizing for your firm's template:**
If your firm has a specific initiation report template (most bulge-bracket banks do), provide a sample DOCX and edit the skill file to reference your formatting standards:
```bash theme={null}
open ~/.claude/skills/equity-research/initiating-coverage.md
```
Add your firm-specific requirements: cover page layout, disclaimer text, font choices, color scheme, and section ordering.
**Connecting to your data sources:**
```json theme={null}
{
"mcpServers": {
"sec-edgar": {
"command": "edgar-mcp-server",
"args": ["--user-agent", "YourFirm research@yourfirm.com"]
},
"bloomberg": {
"command": "bloomberg-mcp-server",
"args": ["--api-key", "YOUR_KEY"]
}
}
}
```
**Using your firm's PPT template for charts:**
To match your firm's chart styling (colors, fonts, axis formatting), use `/ppt-template` to teach Claude your layout, then reference it in Task 4.
## Best Practices
* **Complete tasks sequentially**: Do not skip ahead. Each task builds on prior outputs, and rushing to the final report without solid underlying work produces a weak product.
* **Verify prerequisites rigorously**: Before starting Task 3, confirm the financial model is complete and accurate. Numbers in the final report must match the model exactly.
* **Write comprehensively, not summarily**: Task 1 requires 6,000-8,000 words. Do not produce summaries or bullet-point outlines. Institutional clients expect thorough, detailed analysis.
* **Cross-check all numbers**: The price target in the report must match the valuation analysis, which must match the financial model. Any inconsistency undermines credibility.
* **Cite everything**: Every data point should trace to a specific source with a clickable hyperlink. This is a non-negotiable institutional standard.
## Quality Standards
All outputs meet institutional standards:
* **Comprehensive**: Meet all minimum requirements (page counts, word counts, chart counts)
* **Detailed**: Specific data and examples, not generic statements
* **Quantified**: Lead with numbers and metrics
* **Cited**: Proper sources with clickable hyperlinks
* **Professional**: Institutional-quality formatting
* **Accurate**: All numbers verified and cross-checked between deliverables