An Empirical Analysis of Analysts’ Target Prices: Short-term - download pdf or read online

An Empirical Analysis of Analysts’ Target Prices: Short-term - download pdf or read online

By Brav A., Lehavy R.

Utilizing a wide database of analysts' aim costs issued over the interval 1997-1999, we learn temporary industry reactions to focus on cost revisions and long term comovement of objective and inventory prices.We ¢nd a signi¢cant marketplace response to the data contained in analysts' objective costs, either unconditionally and conditional on contemporaneously issued inventory advice and profits forecast revisions. utilizing a cointegration technique, we examine the long term habit of marketplace and goal prices.We ¢nd that, on general, the one-year-ahead goal fee is 28 percentage larger than the present industry fee.

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Example text

The evidence of such a ‘‘drift,’’ however interpreted, is also relevant to the current debate regarding the objectivity and unbiasedness of analyst reports. Our ¢ndings should serve as a starting point for further research on various related questions. Since the ratio of target-to-market prices can be viewed as a measure of ex ante expected return, it would be interesting to examine whether 1964 The Journal of Finance these ex ante returns are unbiased and are more accurate relative to forecasts generated from asset pricing models such as the CAPM or intrinsic value measures such as in Lee et al.

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Stambaugh, 1999, Costs of equity capital and model mispricing, Journal of Finance 54, 67^121. , 1995,The anatomy of the performance of buy and sell recommendations, Financial Analysts Journal 51, (5), 25 ^39. , 1999,The e¡ect of value line investment survey rank changes on common stock prices, Journal of Financial Economics 14, 121^143. S. House of Representatives, Committee on Financial Services, Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, June 14, 2001, Congressional hearing on analyzing the analysts: Are investors getting unbiased research from Wall Street?

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An Empirical Analysis of Analysts’ Target Prices: Short-term Informativeness and Long-term Dynamics by Brav A., Lehavy R.


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