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We examine the forecast efficacy (accuracy and consistency) of equity analyst specialization along horizontal and vertical lines. Conceptually, we compare vertical and horizontal specialists to nonspecialists who cover similar firms and have similar levels of expertise. We find greater forecast efficacy for vertical specialists relative to horizontal specialists, who in turn outperform nonspecialists. The findings are robust to the inclusion of firm and analyst fixed effects. We also find that changes in specialist coverage portfolios as a result of brokerage house mergers are predictably associated with forecast efficacy changes. Evidence from two additional shocks (tariff increases and acquisitions of covered firms) suggests that specialization causes these gains to forecast efficacy. Finally, gains to analyst specialization are concentrated among non-expert analysts, affected by industry and supply chain intensity characteristics, and firm-specific complexity and innovation. A trading strategy using stock recommendations by vertical specialists results in higher abnormal returns than a strategy using recommendations by horizontal specialists. Overall, our findings suggest that analysts’ specialization, especially vertical specialization, improves the information intermediary process.