Bloomberg is out with a ranking of best equity research departments, which it determined by comparing the buy/sell recs of 200 largest cap stocks from 350 research firms over the last 2 years:

1. Merrill Lynch (68 correct recommendations)
2. UBS (58)
3. Credit Suisse (52)
4. Morgan Stanley (48)
5. Deutsche Bank (46)

In addition to the rankings, the B’berg article is sort of a state of the industry for research analysts. The conclusion seems to be that being a research analyst is still a viable career option, to the contrary of the gloom and doom forecast for the industry a few years back. But it’s just not as appealing as it once was.

For one, pay is down. Bloomberg cites a compensation consultant who reports that senior salaries are down from their $1MM highs to $600k. Seems a bit unfair to compare salaries to 2000, so if anyone has personal experience, please comment.

The job has just changed, largely due to the fact that research has to pay for itself. In short, the good analysts, if they’re lucky, get to be the lap dogs of hedgies. Over at Citigroup, you have the same number of analysts, just covering more stocks (2,300 in 2003; up to 2,900 now). So that covers the working harder for less pay part… (Unca Scrooge would not be happy).

But it’s not all bad news: instead of spending a good chunk yapping on the phone, more time is spent on actual research. And the much talked about demise of research seems to be hitting the independent firms more than anything, so kids out there looking for a job should head for the big banks.

More than the hours or the pay, though, it seems the glamour is now missing from the job.

“The age of the rock star analyst is gone,” says [Candace Browning, global research director at Merrill Lynch & Co.,] “The age of the alpha-generating analyst is here.”

So strip off those leather cuffs, get a haircut, and go generate that alpha, you toothsome sell side equity research analysts, you.