Learn the report formats Series 87 tests and the core elements that make a research report supportable, balanced, and complete.
Series 87 does not stop at disclosure mechanics. It also tests whether the candidate understands what kinds of research reports exist and what belongs inside them. A report is not complete because it has a rating and a target price. It is complete when the business model, competitive position, financial condition, outlook, valuation logic, and investment risks all support the stated conclusion.
The outline lists initiation reports, ratings changes, price-target changes, earnings previews, earnings reviews, fundamental reports, industry reports, thematic pieces, and short notes tied to important developments. The exam is usually not asking for memorized templates. It is asking whether the candidate knows how the report type changes the depth, focus, and supporting evidence.
| Report type | Main purpose | What the candidate should expect to update |
|---|---|---|
| initiation of coverage | introduce coverage and full thesis | company overview, industry context, valuation, risks, and rating rationale |
| rating or target change | explain a changed view | catalyst, changed assumptions, revised valuation, and updated risk discussion |
| earnings preview or review | frame a near-term event | recent results, expectations, key drivers, and what changed in the outlook |
| industry or theme report | explain a broader sector view | industry forces, comparative positioning, and major cross-company implications |
| short note or news summary | address a discrete development quickly | the event, why it matters, and whether it affects the prior thesis |
The outline’s component list shows what FINRA wants the candidate to recognize as the anatomy of a credible research product. A sound report should connect the company overview to the competitive position, connect the competitive position to the financial outlook, connect the outlook to valuation, and connect valuation to a stated recommendation with clear risks.
That chain matters because many bad answers on Series 87 break the chain. A stem may present a bullish rating with no meaningful risk disclosure, a price target with weak support, or a change in recommendation that does not explain what assumption changed. The candidate should prefer the answer that makes the report internally consistent and evidence-based.
A research thesis is not just an opinion about whether the stock should rise or fall. It is a reasoned statement about what the firm expects, why it expects it, and what assumptions could prove the view wrong. That is why the outline includes company outlook, dividend outlook, sensitivity of costs and revenues, quality and quantity of earnings, review of recent data, review of recent news, valuation, and risk of investment.
In exam terms, this means the report should be readable as an argument:
If one of those links is missing, the report is weaker and the answer choice describing the stronger link is usually correct.
Series 87 favors balanced work product. A report that presents upside without downside, or that cites favorable data while omitting a known adverse development, creates regulatory and exam problems. The candidate should expect fairness and balance to matter not only in public communications generally but also in research content specifically.
This is also why short notes and summaries are tested. A short note is not exempt from the obligation to avoid misleading impressions. If the abbreviated format strips away the context needed to understand the conclusion, the problem is not solved by saying the full report exists elsewhere.
A firm issues a short update reaffirming a buy rating after earnings. The note highlights revenue growth and repeats the price target but omits the company’s newly reduced margin guidance and does not explain whether valuation assumptions changed. What is the strongest Series 87 concern?
A. The note is too short to qualify as research
B. The note may be misleading because it does not present a balanced and supportable update to the thesis
C. The note is acceptable because a reaffirmed rating never requires updated support
D. The note is acceptable if it is sent only to the sales force first
Answer: B. Series 87 expects research updates to stay fair, balanced, and supportable. Omitting a material change that affects the thesis or valuation creates a research-quality and disclosure problem.