DEFINITION of 'Analyst Sponsorship'

A positive endorsement that an analyst makes regarding a company's stock. Analyst sponsorship can change over time as new information is revealed. The analysts that make these predictions to the public are known as sell-side analysts.

Also known as "analyst recommendation".

BREAKING DOWN 'Analyst Sponsorship'

Analyst sponsorship from professional brokerage firms and independent research firms helps investors decide which stocks to purchase. It is important to note that these are only recommendations, and in no way can the analysts guarantee the future price of the stock.

A conflict of interest can occur if the analyst has a position in the stock he or she is sponsoring. It can also occur when analysts are making recommendations on stocks that the investment firm has a vested interest in (i.e. underwriting a new offering). The latter is avoided by keeping analysts and underwriters separated by what is known as a Chinese Wall.

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