workflow-er-initiating-coverage

name

workflow-er-initiating-coverage

description

WHAT: Five-task pipeline for producing a 30-50 page equity research initiating coverage report — company research, financial modelling (three-statement), multi-method valuation (DCF + comps + SOTP + Monte Carlo), exhibit generation, and full report assembly. Every financial figure must come from a corp-finance-mcp or FMP tool call. WHEN: Invoke when initiating research coverage on a new company or sector — generating the first comprehensive published report including an investment rating, price target, bull/base/bear scenarios, and detailed financial model.

Equity Research: Initiating Coverage

What this skill covers

A five-task pipeline for initiating coverage on a new company. Each task produces a specific deliverable; tasks are executed sequentially with explicit user confirmation between steps. The output is a 30-50 page institutional equity research report meeting sell-side publication standards.

Core Rules

• Every number from a corp-finance-mcp or FMP tool call — never LLM-generated
• At least 2 independent valuation methods for any price target
• Bull/base/bear scenarios with probability weights mandatory
• Source attribution for every figure

Task 1 — Company Research

Output: 6-8K word research document covering business model, competitive landscape, management, and TAM.

Tools:

• fmp_company_profile — company description, sector, industry, market cap, employees
• fmp_income_statement — 3-5 years historical revenue, margins, earnings
• fmp_balance_sheet — asset base, capital structure, working capital
• fmp_cash_flow — operating cash flow, capex, free cash flow generation
• fmp_key_metrics — revenue per share, debt/equity, ROIC, book value
• fmp_financial_ratios — profitability, leverage, efficiency, valuation ratios

Sections:

1. Business model and revenue drivers
2. Competitive landscape and market positioning
3. Management track record and capital allocation history
4. Total addressable market sizing (TAM/SAM/SOM)
5. Key risks and competitive threats

Task 2 — Financial Modelling

Output: Integrated 3-statement model summary with 5-year projections.

Tools:

• three_statement_model — integrated IS/BS/CF with circular reference resolution
• fmp_income_statement — 3 years historical data as base
• fmp_balance_sheet — historical balance sheet for working capital trends
• fmp_cash_flow — historical capex intensity and cash conversion

Deliverable includes:

• Revenue build-up by segment or driver
• Margin trajectory with explicit assumptions per line item
• Capex and depreciation schedule
• Working capital assumptions (DSO, DIO, DPO trends)
• Debt schedule and interest expense
• Balance sheet integrity check (A = L + E every period)

Task 3 — Valuation Analysis

Output: Valuation summary with base/bull/bear price targets and full sensitivity analysis.

Tools:

• wacc_calculator — CAPM-based cost of capital
• dcf_model — discounted cash flow with terminal value (both Gordon Growth and exit multiple)
• comps_analysis — trading multiples vs 4-6 comparable companies
• sotp_valuation — sum-of-the-parts for multi-segment businesses
• target_price — blended target from multiple methodologies
• sensitivity_matrix — WACC vs terminal growth; exit multiple vs EBITDA growth
• monte_carlo_dcf — stochastic valuation; median value and 90% confidence interval

Rules:

• Terminal value must be 50-75% of enterprise value — if >80%, extend the forecast period
• Trading comps on EV/EBITDA, P/E, EV/Revenue with median and mean
• Sensitivity tables: WACC ±100bps vs TGR ±50bps (minimum)

Task 4 — Exhibit Generation

Output: Data tables for report inclusion.

Tools: FMP historical data endpoints for trend series.

Tables required:

• Revenue growth and margin trends (5-year historical + 5-year projected)
• Valuation multiple history (EV/EBITDA, P/E, EV/Revenue)
• Peer comparison table (multiples, growth, margins, returns)
• Free cash flow bridge (EBITDA to FCF walk)
• Capital structure evolution (debt maturity profile, leverage trend)

Task 5 — Report Assembly

Output: Final 30-50 page initiating coverage report.

Report structure:

1. Investment Summary (1 page) — rating, price target, key thesis, upside/downside
2. Company Overview (2 pages) — business model, history, competitive position
3. Industry Analysis (2 pages) — TAM, competitive dynamics, secular trends
4. Financial Analysis (3 pages) — historical performance, projection model, key metrics
5. Valuation (3 pages) — DCF, comps, SOTP, sensitivity tables, football-field chart data
6. Risk Factors (1 page) — company, industry, and macro risks ranked by probability and impact
7. Appendix — detailed financial statements, comp sheet, methodology notes

Prerequisites: Task 5 requires all prior task outputs. Task 3 requires Task 2 output.

Output format

Final report includes: investment rating (Buy/Hold/Sell), price target, key metrics table, sensitivity tables, three scenarios with probability weights.

Quality gates

• At least 2 valuation methods used for price target
• Monte Carlo median and 90% CI produced
• Bull/base/bear scenarios with probability weights summing to 100%
• Terminal value between 50-75% of enterprise value
• Balance sheet check: A = L + E in every forecast period
• All figures cited with tool name and key assumptions

Related skills

• workflow-er-earnings-update — subsequent updates once coverage is initiated
• workflow-er-thesis-tracker — ongoing bull/base/bear tracking framework
• workflow-er-model-update — model revisions triggered by new information
• workflow-deal-citation-standards — citation format for all tool outputs and filings
• workflow-deal-quality-checklist — final QC before publishing