Initiating Coverage
AnthropicOfficialPublished by Anthropic
- Skill
- Workflow
- Business and productivity
- Apache-2.0
- Low risk
AutoGineer summary
Written by AutoGineer from the skill’s own files, not by the author
This skill provides a systematic, multi-task process for generating equity research initiation reports. It enforces a strict, single-task execution model to ensure each component of the report—company research, financial modeling, valuation analysis, chart generation, and final assembly—is completed with verified inputs before moving to the next stage. The workflow is designed to produce professional-grade documentation, including detailed financial models, valuation analysis, and visual charts, following institutional standards.
What it does
- Conducts qualitative company research including management bios and competitive analysis.
- Builds comprehensive Excel financial models with 6 essential tabs.
- Performs valuation analysis using DCF, comparables, and precedent transactions.
- Generates 25-35 professional financial charts for visual data representation.
- Assembles all components into a final, text-dense DOCX research report.
When to use it
- When you need to produce a comprehensive equity research initiation report.
- When you require a structured, step-by-step approach to financial analysis.
- When you need to maintain strict quality control across multiple research tasks.
- When you are preparing institutional-standard financial documentation.
Advantages
- Enforces a logical, dependency-aware task order.
- Ensures data integrity by verifying prerequisites before each task.
- Produces standardized, professional-grade financial outputs.
- Provides clear, granular control over the research and assembly process.
Usage examples
- “Use initiating-coverage, Task 1 for Tesla”
- The agent initiates the company research task for Tesla, producing a detailed research document.
- “Do Task 2 of initiating-coverage for Tesla”
- The agent begins the financial modeling task, requiring access to financial statements or pre-extracted data.
- “Run Task 3 for Tesla using the initiating-coverage skill”
- The agent performs valuation analysis, provided that the financial model from Task 2 is already complete.
- “I want to complete all 5 tasks for Tesla”
- The agent explains the one-task-at-a-time requirement and asks to start with Task 1.
Install
Download the skill as a ZIP:
https://autogineer.com/agent-skills/anthropics/initiating-coverage/downloadUnzip it into the cross-client skills folder of your project:
mkdir -p .agents/skills && unzip initiating-coverage.zip -d .agents/skills
Documentation by Anthropic
Initiating Coverage
Create institutional-quality equity research initiation reports through a structured 5-task workflow. Each task must be executed separately with verified inputs.
Overview
This skill produces comprehensive first-time coverage reports following institutional standards (JPMorgan, Goldman Sachs, Morgan Stanley format). Tasks are executed individually, each verifying prerequisites before proceeding.
Default Font: Times New Roman throughout all documents (unless user specifies otherwise).
⚠️ CRITICAL: One Task at a Time
THIS SKILL OPERATES IN SINGLE-TASK MODE ONLY.
If User Requests Full Pipeline
When user requests:
"Create a coverage initiation report for [Company]"
"Write an initiation report for [Company]"
"Do the entire equity research process for [Company]"
"Complete all 5 tasks for [Company]"
Any request that implies running multiple tasks or the entire workflow
REQUIRED RESPONSE:
Ask which specific task to perform:
I can help you create an equity research initiation report for [Company]. This involves 5 separate tasks that need to be completed individually: 1. Company Research - Research business, management, industry 2. Financial Modeling - Build projection model 3. Valuation Analysis - DCF and comparable companies 4. Chart Generation - Create 25-35 charts 5. Report Assembly - Compile final report Which task would you like to start with?When user explicitly requests all tasks together:
I understand you'd like to complete the entire initiation report pipeline. Currently, this skill supports executing one task at a time, which allows for better quality control and review at each stage. We're working on a seamless end-to-end workflow that will make this process more automated, but for now, we'll need to complete each task separately. Would you like to start with Task 1 (Company Research)?Never automatically assume which task to start - always ask user to confirm.
Never execute multiple tasks in sequence - complete one task, deliver outputs, then wait for next user request.
Task Execution Rules
✅ Execute exactly ONE task per user request
✅ Always verify prerequisites before starting a task
✅ Deliver task outputs and confirm completion
✅ Wait for user to explicitly request the next task
❌ Never chain multiple tasks together automatically
❌ Never assume user wants to proceed to next task
❌ Never execute Tasks 3-5 without verifying required inputs exist
⚠️ Deliverables Policy: NO SHORTCUTS
DELIVER ONLY THE SPECIFIED OUTPUTS. DO NOT CREATE EXTRA DOCUMENTS.
Each task specifies exact deliverables. Do NOT create:
❌ "Completion summaries"
❌ "Executive summaries"
❌ "Quick reference guides"
❌ "Next steps documents"
❌ "Task completion reports"
❌ Any other "helpful" documentation not explicitly specified
Why: These extras waste context and are not part of the professional workflow.
What TO deliver:
✅ Task 1: Research document (.md) — NOTHING ELSE
✅ Task 2: Financial model (.xlsx) — NOTHING ELSE
✅ Task 3: Valuation analysis (.md) + Excel tabs added to Task 2 file — NOTHING ELSE
✅ Task 4: Charts zip file (.zip) — NOTHING ELSE
✅ Task 5: Final report (.docx) — NOTHING ELSE
If a deliverable is not listed above, DO NOT CREATE IT.
Task Selection
Select which task to execute:
| Task | Name | Prerequisites | Output |
|---|---|---|---|
| 1 | Company Research | Company name/ticker | 6-8K word document |
| 2 | Financial Modeling | 10-K or financials access | Excel model (6 tabs) |
| 3 | Valuation Analysis | Financial model (Task 2) | Valuation + price target |
| 4 | Chart Generation | Tasks 1, 2, 3 + external data | 25-35 PNG/JPG charts |
| 5 | Report Assembly | ALL previous tasks (1-4) | 30-50 page DOCX report |
How to Use This Skill
User Request Patterns and Responses
Pattern 1: User specifies a specific task
User: "Use initiating-coverage, Task 1 for Tesla"
Response: ✅ Execute Task 1 immediatelyPattern 2: User asks for "initiation report" or "full pipeline"
User: "Create a coverage initiation report for Tesla"
Response: ❌ DO NOT start any task automatically
✅ Ask which task to start with (see template above)Pattern 3: User wants to do "all tasks" or "entire workflow"
User: "I want to complete all 5 tasks for Tesla"
Response: ❌ DO NOT chain tasks together
✅ Explain one-at-a-time limitation (see template above)
✅ Ask if they want to start with Task 1Correct Usage Examples
Executing a single task:
"Use initiating-coverage skill, Task 1 for Tesla"
"Do Task 2 of initiating-coverage for Tesla"
"Run Task 3 for Tesla using the initiating-coverage skill"Completing full report (requires 5 separate requests):
Request 1: "Do Task 1 for Tesla" → Complete → Deliver outputs
Request 2: "Do Task 2 for Tesla" → Complete → Deliver outputs
Request 3: "Do Task 3 for Tesla" → Complete → Deliver outputs
Request 4: "Do Task 4 for Tesla" → Complete → Deliver outputs
Request 5: "Do Task 5 for Tesla" → Complete → Deliver outputsTask Execution Order
For a complete initiation report, tasks must be executed in separate user requests following this order:
Request 1: Task 1 - Company Research (independent)
↓ [User reviews outputs and requests next task]
Request 2: Task 2 - Financial Modeling (independent)
↓ [User reviews outputs and requests next task]
Request 3: Task 3 - Valuation Analysis (requires Task 2 output)
↓ [User reviews outputs and requests next task]
Request 4: Task 4 - Chart Generation (requires Tasks 2 & 3 outputs)
↓ [User reviews outputs and requests next task]
Request 5: Task 5 - Report Assembly (requires ALL previous task outputs)Note: Tasks 1 and 2 can be run in any order. Tasks 3-5 have strict dependencies and must verify inputs before proceeding.
Task 1: Company Research
Purpose: Research company's business, management, competitive position, industry, and risks.
Prerequisites: ✅ None (fully independent)
Company name or ticker symbol
Process:
Verify company name/ticker provided
Load detailed instructions from references/task1-company-research.md
Execute qualitative research workflow
Deliver research document
Output: Company Research Document (6,000-8,000 words)
Company overview & history
Management bios (300-400 words × 3-4 execs)
Products & services analysis
Industry overview
Competitive analysis (5-10 competitors)
TAM sizing
Risk assessment (8-12 risks)
File name: [Company]_Research_Document_[Date].md
⚠️ DELIVER ONLY THIS 1 FILE. NO completion summaries, no extra documents.
⚠️ DO NOT TAKE SHORTCUTS:
✅ Write full 6,000-8,000 words (not summaries)
✅ Complete 300-400 word bios for ALL 3-4 executives
✅ Analyze ALL 5-10 competitors thoroughly
✅ Cover all 8-12 risks across 4 categories
❌ Do not abbreviate sections to save time
❌ Do not skip any required sections
Verification before proceeding: None required for this task.
Task 2: Financial Modeling
Purpose: Extract historical financials and build comprehensive Excel financial model with projections and scenarios.
Prerequisites: ⚠️ Verify before starting
Required: Access to company financial data
For public companies: Latest 10-K from SEC EDGAR
For private companies: Financial statements or available estimates
OR: Pre-extracted historical financials provided by user
Optional: Company research (Task 1) for business context
Input Verification:
BEFORE STARTING - Select approach:
Option A: Extract financials (most common)
- [ ] Have access to 10-K or financial statements?
- [ ] Ready to extract 3-5 years of data?
Option B: User provided pre-extracted financials
- [ ] Historical financials file received?
- [ ] Contains income statement, cash flow, balance sheet (3-5 years)?
Optional:
- [ ] Company research (Task 1) complete for context?Process:
Verify access to financial data
Load detailed instructions from references/task2-financial-modeling.md
Step 1: Extract historical financials (if needed)
Step 2+: Build projection model with 6 essential tabs
Deliver Excel model
Output: Excel Financial Model (.xlsx)
6 essential tabs:
Revenue Model - Product breakdown (20-30 rows) + Geography breakdown (15-20 rows)
Income Statement - Full P&L with 40-50 line items, historical (3-5 years) + projected (5 years)
Cash Flow Statement - Operating/Investing/Financing activities, historical + projected
Balance Sheet - Assets/Liabilities/Equity, historical + projected
Scenarios - Bull/Base/Bear comparison table
DCF Inputs - Prepared for Task 3 valuation
File name: [Company]_Financial_Model_[Date].xlsx
⚠️ DELIVER ONLY THIS 1 FILE. NO completion summaries, no extra documents.
⚠️ DO NOT TAKE SHORTCUTS:
✅ If extracting financials: Extract ALL line items from 3 financial statements (3-5 years)
✅ Build ALL 6 projection tabs completely with full detail
✅ Create detailed revenue model with 20-30 product rows AND 15-20 geography rows
✅ Build complete income statement with 40-50 line items (not abbreviated)
✅ Include full cash flow statement and balance sheet with all line items
✅ Complete ALL three scenarios (Bull/Base/Bear) with different parameters
❌ Do not create simplified/abbreviated versions
❌ Do not skip any of the 6 essential tabs
❌ Do not skip historical financials extraction if needed
Verification before proceeding to Task 3:
[ ] Historical financials extracted (if needed) or provided
[ ] Excel file created and can be opened
[ ] Model has all 6 essential tabs (Revenue Model, Income Statement, Cash Flow, Balance Sheet, Scenarios, DCF Inputs)
[ ] Historical data (3-5 years) incorporated
[ ] Projections complete (5 years forward)
[ ] Scenarios complete (Bull/Base/Bear)
Task 3: Valuation Analysis
Purpose: Perform comprehensive valuation using DCF, comparables, and precedent transactions.
Prerequisites: ⚠️ Verify before starting
Required: Financial model from Task 2
Projected income statements
Projected cash flows
Revenue and EBITDA forecasts
DCF inputs (unlevered FCF)
⚠️ CRITICAL: DO NOT START THIS TASK UNLESS TASK 2 IS COMPLETE
This task requires the financial model from Task 2. Starting without it will result in incomplete work.
IF TASK 2 IS NOT COMPLETE: Stop immediately and inform the user that Task 2 (Financial Modeling) must be completed first. Do not attempt to proceed or create placeholder valuations.
Input Verification:
BEFORE STARTING:
- [ ] Task 2 complete? (Financial model exists)
- [ ] Model file path/location known?
- [ ] Can access projected financials from model?
Required from model:
- [ ] Projected FCF (5 years)
- [ ] Revenue projections
- [ ] EBITDA projections
- [ ] Terminal year metricsProcess:
Verify financial model is accessible
Load detailed instructions from references/task3-valuation.md
Execute valuation workflow
Deliver valuation analysis
Output: Valuation Analysis (4-6 pages + Excel tabs)
DCF analysis with sensitivity tables
Comparable companies (5-10 peers with statistical summary)
Precedent transactions (if applicable)
Valuation football field
Price target: $XX.XX
Recommendation: BUY/HOLD/SELL
Upside: XX%
Key catalysts (3-5)
Files:
[Company]_Valuation_Analysis_[Date].md(written analysis document)Excel tabs added to
[Company]_Financial_Model_[Date].xlsx(from Task 2)DCF tab with calculations
Sensitivity analysis tab
Comparable companies tab
Valuation summary tab
⚠️ DELIVER ONLY: 1 markdown file + 4 tabs added to existing Excel. NO completion summaries, no extra documents.
⚠️ DO NOT TAKE SHORTCUTS:
✅ Complete full DCF analysis with sensitivity matrix (not simplified)
✅ Analyze ALL 5-10 comparable companies with full data
✅ Include statistical summary in comps table (max/75th/median/25th/min)
✅ Create complete sensitivity analysis tab with multiple WACC and terminal growth scenarios
✅ Write full 4-6 pages of valuation analysis (not abbreviated)
✅ Research and justify price target with specific methodology
❌ Do not skip comparable company analysis
❌ Do not create simplified DCF without sensitivity
Verification before proceeding to Task 4:
[ ] Price target determined
[ ] Valuation uses multiple methods (DCF + Comps minimum)
[ ] DCF sensitivity table complete
[ ] Comparable companies table includes statistical summary
Task 4: Chart Generation
Purpose: Generate 25-35 professional financial charts for the report.
Prerequisites: ⚠️ Verify before starting
Required: Company research from Task 1
Company history and milestones (for timeline charts)
Management team and org structure (for org charts)
Product portfolio (for product charts)
Customer segmentation (for customer charts)
Competitive landscape (for competitive charts)
TAM analysis (for market size charts)
Required: Financial model from Task 2 (with Task 3 valuation tabs added)
Revenue by product/geography data (Task 2 tabs)
Margin trends (Task 2 tabs)
Scenario comparison data (Task 2 tabs)
DCF sensitivity table (Task 3 tab in same Excel file)
Comparable companies data (Task 3 tab in same Excel file)
Valuation ranges (Task 3 tab in same Excel file)
Required: External market data
Historical stock price data (Yahoo Finance, Bloomberg, etc.)
Historical valuation multiples (for historical trend charts)
⚠️ CRITICAL: DO NOT START THIS TASK UNLESS TASKS 1, 2, AND 3 ARE COMPLETE
This task requires outputs from all three previous tasks. Starting without them will result in incomplete charts.
IF ANY OF TASKS 1, 2, OR 3 ARE NOT COMPLETE: Stop immediately and inform the user which tasks need to be completed first. The specific requirements are:
Task 1: Company research document (for 9 charts)
Task 2: Financial model with all 6 tabs (for 8 charts)
Task 3: Valuation tabs added to the model (for 6 charts)
External data access (for 2 charts)
Do not attempt to create placeholder charts or skip charts due to missing data.
Input Verification:
BEFORE STARTING:
- [ ] Task 1 complete? (Company research exists)
- [ ] Task 2 complete? (Financial model exists)
- [ ] Task 3 complete? (Valuation analysis exists)
- [ ] Can access external market data sources?
Required from Task 1:
- [ ] Company history and milestones (for charts 05, 06)
- [ ] Management team structure (for chart 07)
- [ ] Product portfolio details (for chart 08)
- [ ] Customer segmentation data (for chart 09)
- [ ] Competitive landscape analysis (for charts 16, 17, 18)
- [ ] TAM sizing and market data (for chart 15)
Required from Task 2:
- [ ] Revenue by product (historical + projected) - for chart 03 ⭐
- [ ] Revenue by geography (historical + projected) - for chart 04 ⭐
- [ ] Income statement with margins (for charts 02, 10, 11)
- [ ] Cash flow statement (for chart 12)
- [ ] Scenario comparison data (for chart 14)
Required from Task 3:
- [ ] DCF sensitivity matrix - for chart 28 ⭐
- [ ] DCF components (for chart 29)
- [ ] Comparable companies data (for charts 30, 31)
- [ ] Valuation ranges - for chart 32 ⭐
Required from External Sources:
- [ ] Historical stock price data (for chart 01)
- [ ] Historical valuation multiples (for chart 34)Process:
Verify model and valuation outputs are accessible
Load detailed instructions from references/task4-chart-generation.md
Execute chart generation workflow
Package all charts into a zip file
Deliver zip file
Output: 25-35 Professional Chart Files (PNG/JPG, 300 DPI) packaged in zip
4 MANDATORY Charts (must be present) ⭐:
chart_03: Revenue by product (stacked area)
chart_04: Revenue by geography (stacked bar)
chart_28: DCF sensitivity (2-way heatmap)
chart_32: Valuation football field (horizontal bars)
25 REQUIRED Charts (specific list):
Investment Summary: chart_01
Financial Performance: charts 02, 03⭐, 04⭐, 10, 11, 12, 14
Company 101: charts 05, 06, 07, 08, 09, 15, 16
Competitive/Market: charts 17, 18
Scenario Analysis: chart 13
Valuation: charts 28⭐, 29, 30, 31, 32⭐, 33, 34
10 OPTIONAL Charts (for 26-35 range):
charts 19-27, 35 (customer acquisition, unit economics, product roadmap, etc.)
IMPORTANT: Task 5 embeds ALL charts created (25-35) for visual density (1 chart per 200-300 words).
File naming: chart_01_description.png, chart_02_description.png, etc.
Deliverable: [Company]_Charts_[Date].zip containing all 25-35 chart files + chart_index.txt
⚠️ DELIVER ONLY THIS 1 ZIP FILE. NO completion summaries, no separate chart lists, no extra documents.
⚠️ DO NOT TAKE SHORTCUTS:
✅ Create ALL 25 required charts minimum (specific list provided in task4-chart-generation.md)
✅ Include ALL 4 mandatory charts:
chart_03: Revenue by product (stacked area) ⭐
chart_04: Revenue by geography (stacked bar) ⭐
chart_28: DCF sensitivity (heatmap) ⭐
chart_32: Valuation football field ⭐
✅ Optional: Add 1-10 more charts to reach 26-35 total for greater visual density
✅ Generate professional-quality charts at 300 DPI (not low-res placeholders)
✅ Create unique, well-formatted charts for each visualization
✅ Package all charts in zip file with chart index
❌ Do not create only 10-15 charts (minimum is 25)
❌ Do not skip any of the 4 mandatory charts
❌ Do not use low-quality/placeholder images
Verification before proceeding to Task 5:
[ ] Minimum 25 chart files created (required)
[ ] All 4 mandatory charts present:
[ ] chart_03: Revenue by product ⭐
[ ] chart_04: Revenue by geography ⭐
[ ] chart_28: DCF sensitivity ⭐
[ ] chart_32: Valuation football field ⭐
[ ] All charts open and display correctly
[ ] Charts saved at 300 DPI (print quality)
[ ] Chart index created listing all files with categories
[ ] All charts packaged in zip file
[ ] File naming follows convention: chart_##_description.png
Task 5: Report Assembly
Purpose: Write and assemble the comprehensive final DOCX report.
Prerequisites: ⚠️ Verify before starting
Required: Company research from Task 1
All 6-8K words of content
Management bios
Competitive analysis
Risk assessment
Required: Financial model from Task 2
Excel workbook
All projections and scenarios
Required: Valuation analysis from Task 3
Price target and recommendation
DCF, comps, precedent transactions
All valuation data
Required: Chart files from Task 4
Zip file containing all 25-35 PNG/JPG files
Chart index included in zip
⚠️ CRITICAL: DO NOT START THIS TASK UNLESS ALL TASKS 1-4 ARE COMPLETE
This is the final assembly task. It cannot be completed without all previous work products.
IF ANY OF TASKS 1, 2, 3, OR 4 ARE NOT COMPLETE: Stop immediately and inform the user which tasks need to be completed first. The specific requirements are:
Task 1: Company research document (6-8K words)
Task 2: Financial model with all 6 tabs
Task 3: Valuation analysis with price target and recommendation
Task 4: Charts zip file with 25-35 charts
Do not attempt to create placeholder content, substitute missing sections, or assemble an incomplete report. The report requires ALL inputs to be publication-ready.
Input Verification:
BEFORE STARTING - ALL TASKS MUST BE COMPLETE:
Task 1 Verification:
- [ ] Company research document exists? (6-8K words)
- [ ] Management bios complete? (300-400 words × 3-4 execs)
- [ ] Competitive analysis complete? (5-10 competitors)
- [ ] Risk assessment complete? (8-12 risks)
Task 2 Verification:
- [ ] Financial model exists and can be opened?
- [ ] Model has projections (5 years)?
- [ ] Scenarios exist (Bull/Base/Bear)?
Task 3 Verification:
- [ ] Valuation analysis complete?
- [ ] Price target determined?
- [ ] Recommendation set? (BUY/HOLD/SELL)
- [ ] DCF and comps complete?
Task 4 Verification:
- [ ] Chart zip file exists?
- [ ] Can extract/access all 25-35 chart files from zip?
- [ ] All 4 mandatory charts present?
- [ ] Revenue by product (stacked area)
- [ ] Revenue by geography (stacked bar)
- [ ] DCF sensitivity (heatmap)
- [ ] Valuation football field
- [ ] Chart files accessible and can be opened?
IF ANY VERIFICATION FAILS: Stop and complete missing task first.Process:
CRITICAL: Verify ALL prerequisites before starting
Load detailed instructions from references/task5-report-assembly.md
Execute report assembly workflow using Claude's built-in skills:
Use DOCX skill to create and manipulate the Word document
Use XLSX skill to read Excel data from Task 2/3
Use Read tool to read Task 1 and Task 3 markdown files
Read Task 1 .md file → Convert to Word formatting → Insert charts inline
Read Task 2 .xlsx file → Extract tables → Write quantitative analysis
Read Task 3 .md file + Excel tabs → Copy/adapt valuation analysis
Insert Task 4 .png chart files throughout using DOCX skill
Create text-dense report with charts interspersed every 200-300 words
Save and deliver final DOCX report
Key Principles:
Use Claude's DOCX and XLSX skills (NOT Python libraries)
Use actual file operations (read .md/.xlsx/.png files, write .docx file)
Good equity research reports are text-dense with lots of illustrating images (60-80% page coverage, 1+ chart per page)
🔥 CRITICAL: GO ALL OUT ON THIS TASK
THIS IS THE FINAL DELIVERABLE. DO NOT TAKE SHORTCUTS.
✅ Use full token budget - This is the culmination of all previous work
✅ Write every section completely - Do not summarize or abbreviate
✅ Hit ALL minimum requirements - 30+ pages, 10,000+ words, 25+ charts, 12+ tables
✅ Be thorough on projection assumptions - 2,000-3,000 words with product-by-product detail
✅ Be comprehensive on scenarios - 1,500-2,000 words with specific Bull/Base/Bear parameters
✅ Insert ALL charts from Task 4 - Not just a few, ALL 25-35 charts throughout
✅ Create ALL tables from Task 2/3 - Extract every financial table, don't skip any
✅ Use Task 1 content verbatim - Copy/paste full Company 101 sections (6-8K words)
✅ Professional quality only - This must be indistinguishable from JPMorgan/Goldman Sachs research
NEVER:
❌ "This section would include..." - WRITE THE ACTUAL SECTION
❌ "Charts would be inserted here..." - INSERT THE ACTUAL CHARTS
❌ "See financial model for details..." - EXTRACT AND INCLUDE THE DETAILS
❌ Skip sections due to length - Every section MUST be complete
❌ Abbreviate for token conservation - Use whatever tokens are needed
This is publication-ready institutional research. Spare no effort, tokens, or detail.
Output: Comprehensive Equity Research Report (.docx)
Specifications:
Length: 30-50 pages (MINIMUM 30)
Word count: 10,000-15,000 words (MINIMUM 10,000)
Charts: 25-35 embedded images
Tables: 12-20 comprehensive tables
Format: Professional DOCX with clickable hyperlinks
Structure:
Page 1: Investment Summary (INITIATING COVERAGE format)
Pages 2-5: Investment thesis & risks
Pages 6-17: Company 101
Pages 18-30: Financial analysis & projections
Pages 31-40: Valuation analysis
Pages 41-50: Appendices
File name: [Company]_Initiation_Report_[Date].docx
⚠️ DELIVER ONLY THIS 1 DOCX FILE. NO executive summaries, no "highlights" documents, no extra files.
Final Verification:
[ ] Report is 30-50 pages
[ ] Word count is 10,000-15,000
[ ] 25-35 charts embedded
[ ] 12-20 tables included
[ ] All citations are clickable hyperlinks
[ ] Numbers match financial model exactly
Input Verification Protocol
Why Input Verification Matters
Each task has strict prerequisites. Running a task without required inputs will:
Waste time with incomplete work
Produce low-quality outputs
Require rework
Always verify inputs before starting a task.
Verification Checklist by Task
Task 1: ✅ No verification needed (independent)
Task 2: Check historical financials available
Task 3: Check financial model exists and is accessible
Task 4: Check both model (Task 2) AND valuation (Task 3) exist
Task 5: Check ALL previous tasks complete (1, 2, 3, 4)
What to Do if Verification Fails
IF prerequisites are missing:
1. Stop the current task
2. Identify which prerequisite task(s) need to be completed
3. Execute the missing task(s) first
4. Return to current task once prerequisites are metExample Verification Dialogue
User: "Use initiating-coverage, Task 5 for Tesla"
Claude: "Starting Task 5: Report Assembly for Tesla
VERIFICATION - Checking prerequisites:
- Task 1 (Company research)... ❌ NOT FOUND
- Task 2 (Financial model)... ❌ NOT FOUND
- Task 3 (Valuation)... ❌ NOT FOUND
- Task 4 (Charts)... ❌ NOT FOUND
⚠️ VERIFICATION FAILED
Task 5 requires ALL previous tasks to be complete.
To proceed:
1. Complete Task 1: Company Research
2. Complete Task 2: Financial Modeling
3. Complete Task 3: Valuation Analysis
4. Complete Task 4: Chart Generation
5. Then return to Task 5
Would you like to start with Task 1 first?"Task Reference Files
Detailed instructions for each task are in separate reference files to keep this skill lean:
references/task1-company-research.md - Company research workflow
references/task2-financial-modeling.md - Financial modeling workflow
references/task3-valuation.md - Valuation methodology
Also see: references/valuation-methodologies.md for DCF/comps deep dive
references/task4-chart-generation.md - Chart generation workflow
references/task5-report-assembly.md - Report writing workflow
Also see: assets/report-template.md for report structure
Also see: assets/quality-checklist.md for quality checks
When to load reference files: Load ONLY the reference file associated with the specific task being performed. These files are very large - do not load multiple reference files at once. Read the appropriate task reference file at the start of the task for detailed step-by-step instructions.
Quality Standards
All outputs meet institutional standards from leading investment banks (JPMorgan, Goldman Sachs, Morgan Stanley):
Comprehensive: Meet all minimum requirements
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
Important Notes
Task Independence
Task 1 can run anytime (no dependencies)
Task 2 can run anytime (just needs historical data)
Tasks 1 & 2 can run in parallel
Task 3 requires Task 2
Task 4 requires Tasks 2 & 3
Task 5 requires Tasks 1, 2, 3, & 4
Session Management
Same session: Outputs automatically available to subsequent tasks
Different sessions: Reference previous task outputs explicitly
"Use Task 3 with the model from yesterday at [path]"
"Use Task 5 with the research document at [path]"File Organization
Recommended structure during workflow:
ProjectFolder/
├── Task1_Research/
│ └── [Company]_Research_Document.md
├── Task2_Model/
│ └── [Company]_Financial_Model.xlsx
├── Task3_Valuation/
│ └── [Company]_Valuation_Analysis.pdf
├── Task4_Charts/
│ ├── chart_01.png
│ └── ... (25-35 files)
└── Task5_Report/
└── [Company]_Initiation_Report.docxNo End-to-End Execution
This skill does NOT support running all tasks automatically in sequence. Each task must be explicitly requested and verified.
Why: This ensures:
Quality control at each stage
Ability to review outputs before proceeding
Flexibility to pause/resume workflow
Clear verification of prerequisites
Success Criteria
A successful initiation report workflow should:
Complete all 5 tasks in order
Pass all input verifications
Meet all quality standards
Produce all required deliverables
Numbers cross-check between outputs
Final report is publication-ready
Output quality: Institutional (JPMorgan/Goldman/Morgan Stanley level) Use case: First-time comprehensive coverage of a company
Files
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references/valuation-methodologies.md
Valuation Methodologies for Equity Research
This reference document provides comprehensive guidance on the three primary valuation methodologies used in equity research: Discounted Cash Flow (DCF), Trading Comparables, and Precedent Transactions.
Table of Contents
Discounted Cash Flow (DCF) Analysis
Trading Comparables Analysis
Precedent Transactions Analysis
Valuation Reconciliation
Discounted Cash Flow (DCF) Analysis
Overview
DCF analysis values a company based on the present value of its projected future cash flows. This is considered the most theoretically sound valuation method as it's based on fundamental value creation.
Step-by-Step DCF Process
1. Historical Financial Analysis
Collect 3-5 years of historical financials
Calculate historical FCF = EBIT(1-Tax Rate) + D&A - CapEx - Change in NWC
Analyze historical growth rates and margins
Identify trends and cyclicality
2. Build Revenue Projections (5-10 years)
Approaches:
Top-down: Start with market size (TAM) → Market share → Revenue
Bottom-up: Units sold × Price per unit
Hybrid: Combine multiple drivers
Key Considerations:
Management guidance and historical growth
Industry growth rates and market trends
Competitive dynamics and market share evolution
Product pipeline and new market opportunities
Macroeconomic factors
3. Project Operating Expenses
COGS: As % of revenue (analyze historical margins)
SG&A: Often semi-fixed; model as % of revenue with scale effects
R&D: Critical for tech/pharma; model as % of revenue
D&A: Based on CapEx assumptions
Calculate EBIT = Revenue - COGS - Operating Expenses
4. Calculate Unlevered Free Cash Flow
EBIT
× (1 - Tax Rate)
= NOPAT (Net Operating Profit After Tax)
+ Depreciation & Amortization
- Capital Expenditures
- Increase in Net Working Capital
= Unlevered Free Cash Flow (UFCF)CapEx Assumptions:
Maintenance CapEx: Required to maintain current operations (typically 2-4% of revenue)
Growth CapEx: Required for expansion
Consider industry benchmarks and company guidance
Net Working Capital:
NWC = (Accounts Receivable + Inventory) - Accounts Payable
Model as % of revenue or days (DSO, DIO, DPO)
An increase in NWC is a use of cash
5. Determine Terminal Value
Method A: Perpetuity Growth Method
Terminal Value = FCF(final year) × (1 + g) / (WACC - g)g = perpetual growth rate (typically 2-3%, not exceeding GDP growth)
Use when company has reached stable, mature growth
Method B: Exit Multiple Method
Terminal Value = EBITDA(final year) × Exit MultipleExit multiple based on current trading comps
More appropriate for cyclical businesses
6. Calculate Weighted Average Cost of Capital (WACC)
WACC = (E/V × Cost of Equity) + (D/V × Cost of Debt × (1 - Tax Rate))Cost of Equity (using CAPM):
Cost of Equity = Risk-Free Rate + Beta × Equity Risk PremiumRisk-Free Rate: 10-year Treasury yield
Beta: Regression of stock returns vs. market (or use comparable beta)
Equity Risk Premium: Historical average ~5-6%
Cost of Debt:
Cost of Debt = Risk-Free Rate + Credit SpreadUse company's current borrowing rate or implied from bonds
Adjust for credit rating if no bonds outstanding
Capital Structure:
E/V = Market value of equity / Total value
D/V = Market value of debt / Total value
Use target capital structure, not current (if significantly different)
7. Discount Cash Flows to Present Value
PV = Σ [FCFt / (1 + WACC)^t] + [Terminal Value / (1 + WACC)^n]8. Calculate Enterprise Value and Equity Value
Enterprise Value = PV of Projected FCF + PV of Terminal Value
Less: Net Debt (Total Debt - Cash)
Plus: Non-operating Assets
Less: Minority Interest
Less: Preferred Stock
= Equity Value
Price Per Share = Equity Value / Diluted Shares OutstandingDCF Sensitivity Analysis
Always perform sensitivity analysis on key variables:
Two-way sensitivity table: WACC vs. Terminal Growth Rate
Revenue growth scenarios: Base / Bull / Bear cases
Margin assumptions: Operating leverage scenarios
Terminal multiple sensitivity: If using exit multiple method
Example Sensitivity Table:
Terminal Growth Rate
WACC 2.0% 2.5% 3.0%
8.0% $45 $48 $52
9.0% $40 $43 $46
10.0% $36 $39 $41Common DCF Pitfalls to Avoid
Double-counting growth: Don't project high growth without corresponding investment (CapEx, NWC)
Unrealistic terminal growth: Should not exceed long-term GDP growth
Ignoring cyclicality: Normalize earnings for cyclical businesses
Wrong cash flow definition: Use unlevered FCF, not net income
Inconsistent assumptions: Match discount rate to cash flows (unlevered FCF → WACC)
Trading Comparables Analysis
Overview
Trading comps values a company based on how similar companies are valued in the public markets. This reflects current market sentiment and relative valuation.
Step-by-Step Comps Process
1. Select Comparable Companies
Selection Criteria:
Same industry/sector (primary criterion)
Similar business model and revenue streams
Comparable size (market cap, revenue)
Similar growth profile and margins
Similar end markets and geographies
Typical Universe:
Start with 8-15 companies
Remove companies with unique circumstances
Final set of 5-10 companies
2. Gather Financial Information
Required Data:
Current stock price and shares outstanding
Latest fiscal year financial statements
Next-year (NTM) estimates from consensus
Historical growth rates
Calculate Market Metrics:
Market Cap = Share Price × Shares Outstanding
Enterprise Value = Market Cap + Debt + Minority Interest + Preferred - Cash
Net Debt = Total Debt - Cash & Equivalents
3. Calculate Valuation Multiples
Enterprise Value Multiples:
EV/Revenue: Good for early-stage/high-growth companies
EV/EBITDA: Most common; good for capital-intensive businesses
EV/EBIT: Useful when D&A varies significantly
Equity Value Multiples:
P/E (Price/Earnings): Most widely used
P/B (Price/Book): Good for financial institutions
P/S (Price/Sales): For unprofitable companies
Calculate for:
Last Twelve Months (LTM) - historical
Next Twelve Months (NTM) - forward-looking (preferred)
4. Analyze and Select Multiples
Create Comparable Company Table:
| Company | Market Cap | EV/Revenue | EV/EBITDA | EV/EBIT | P/E (NTM) | Revenue Growth | EBITDA Margin |
|---|---|---|---|---|---|---|---|
| Comp A | $10B | 3.5x | 12.0x | 18.0x | 22.0x | 15% | 28% |
| Comp B | $8B | 3.0x | 10.5x | 16.0x | 19.0x | 12% | 27% |
| ... | ... | ... | ... | ... | ... | ... | ... |
| Median | - | 3.2x | 11.0x | 17.0x | 20.5x | 13% | 27.5% |
Adjustments:
Remove outliers (typically >2 standard deviations)
Consider using median instead of mean (less affected by outliers)
Weight multiples if some comps are more comparable
Adjust for differences in growth, margins, risk
5. Apply Multiples to Target Company
Example Calculation:
Target Company NTM EBITDA = $500M
Selected EV/EBITDA Multiple = 11.0x
Implied Enterprise Value = $500M × 11.0x = $5,500M
Less: Net Debt = $1,000M
Equity Value = $4,500M
Shares Outstanding = 100M
Implied Price Per Share = $45.006. Select Appropriate Multiple
Choose based on:
EV/Revenue: High-growth, unprofitable companies (tech, biotech pre-profit)
EV/EBITDA: Most common; capital-intensive industries (manufacturing, telecom)
P/E: Profitable companies with stable cap structure (consumer, retail)
Sector-specific: P/B for banks, EV/Production for oil & gas, EV/Subscriber for media
Premium/Discount Analysis
Apply premiums or discounts based on:
Growth premium: Higher growth → higher multiple
Profitability: Higher margins → higher multiple
Size: Larger companies typically trade at premium (liquidity)
Market position: Market leaders → premium
Geographic: Developed vs. emerging markets
Precedent Transactions Analysis
Overview
Precedent transactions values a company based on prices paid for similar companies in M&A transactions. This reflects control premiums and strategic value.
Step-by-Step Process
1. Identify Relevant Transactions
Selection Criteria:
Same or similar industry
Similar size (within 0.5x to 2x target's size)
Similar business characteristics
Recent transactions (last 3-5 years preferred)
Announced and closed deals (avoid withdrawn deals)
Typical Universe:
5-10 transactions minimum
Focus on recent deals (weight more recent higher)
2. Gather Transaction Details
Required Information:
Transaction date (announcement and close)
Acquisition price and structure (cash, stock, mixed)
Target's financials at time of transaction
Strategic rationale and synergies
Control premium paid
Sources:
SEC filings (S-4, 8-K, proxy statements)
Press releases and investor presentations
M&A databases (CapIQ, FactSet, Bloomberg)
3. Calculate Transaction Multiples
Same multiples as trading comps, but based on transaction value:
Transaction Value = Equity Purchase Price + Assumed Debt - Cash Acquired
EV/Revenue (LTM) = Transaction Value / Target's LTM Revenue
EV/EBITDA (LTM) = Transaction Value / Target's LTM EBITDA
EV/EBIT (LTM) = Transaction Value / Target's LTM EBITCalculate Control Premium:
Control Premium = (Offer Price - Unaffected Price) / Unaffected PriceUnaffected Price = Target's stock price 1-2 days before announcement
Typical range: 20-40%
4. Analyze Precedent Transactions
Create Precedent Transactions Table:
| Date | Target | Acquirer | Deal Value | EV/Revenue | EV/EBITDA | Premium | Rationale |
|---|---|---|---|---|---|---|---|
| Q1'24 | CompX | BuyerA | $5.0B | 4.0x | 14.0x | 35% | Market consolidation |
| Q3'23 | CompY | BuyerB | $3.5B | 3.5x | 12.5x | 28% | Strategic fit |
| Median | - | - | - | 3.8x | 13.0x | 31% | - |
5. Apply to Target Company
Important Considerations:
Precedent multiples typically higher than trading comps (include control premium)
Adjust for differences in transaction rationale
Consider market conditions at time of transactions vs. current
Weight recent transactions more heavily
Example Calculation:
Target Company LTM EBITDA = $450M
Selected EV/EBITDA Multiple = 13.0x (precedent)
vs Trading Comps Multiple = 11.0x
Implied EV (Precedent) = $450M × 13.0x = $5,850M
Implied EV (Trading) = $450M × 11.0x = $4,950M
Implied Control Premium = $5,850M / $4,950M - 1 = 18%Adjustments to Transaction Multiples
Consider adjusting for:
Market conditions: Bull vs. bear market (M&A activity levels)
Deal structure: Strategic vs. financial buyer
Synergies: Transactions with high synergies command premiums
Competitive dynamics: Single vs. multiple bidders
Time value: Older transactions less relevant
Valuation Reconciliation
Creating a Valuation Bridge
Present all three methods in a single framework:
Example Valuation Summary:
| Method | Enterprise Value | Equity Value | Price/Share | Weight | Implied Value |
|---|---|---|---|---|---|
| DCF Analysis | $5,200M | $4,200M | $42.00 | 50% | $21.00 |
| Trading Comps | $5,500M | $4,500M | $45.00 | 30% | $13.50 |
| Precedent Trans. | $5,850M | $4,850M | $48.50 | 20% | $9.70 |
| Weighted Avg | - | - | $44.20 | - | $44.20 |
Weighting the Methods
Typical Weighting:
DCF: 40-60% (fundamental value, but assumes accuracy of projections)
Trading Comps: 25-40% (reflects current market sentiment)
Precedent Trans.: 15-25% (less relevant unless M&A likely)
Adjust weights based on:
Confidence in forecasts: Higher confidence → higher DCF weight
Market conditions: Bull/bear market affects comps reliability
M&A likelihood: Higher if company in play or industry consolidating
Company maturity: Mature companies → higher weight on comps; growth → higher DCF weight
Valuation Range
Always present a valuation range, not a point estimate:
Approach:
Base Case: Most likely scenario
Bull Case: Optimistic assumptions (revenue growth, margins)
Bear Case: Conservative assumptions
Example:
Bear Case: $38 - $40
Base Case: $42 - $46
Bull Case: $48 - $52
Recommendation: BUY with target price of $45 (midpoint of base case)Sanity Checks
Cross-check valuation with:
Historical multiples: Is current valuation in line with history?
Peer comparison: Justified premium/discount vs. peers?
Implied growth: What growth is market pricing in?
Implied returns: IRR from current price to target price
Market cap analysis: Does total market cap make sense?
Conclusion
Using all three valuation methods provides a robust framework for determining fair value:
DCF provides intrinsic value based on fundamentals
Trading Comps reflects current market valuation
Precedent Transactions indicates M&A value and control premium
The key is to understand the assumptions driving each method and to present a well-reasoned valuation range that considers multiple scenarios and methodologies.
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