Do sell-side analysts exhibit differential target price forecasting ability?

Relative valuation and analyst target price forecasts

“…We compare this to the ex post realized 12-month return of the portfolio (solid bars). The graph confirms the finding ofBradshaw and Brown (2005) that analysts on average are unable to forecast the market risk-premium.Z.Da, E. Schaumburg / Journal of Financial Markets 14 (2011) 161-192 …”

“…The target price implied expected return (TPER) is computed as the consensus target price (split adjusted) divided by the end of month stock price: TPER t ¼ TP t =P t À1, where the consensus target price TP t is the simple average of all target prices received during the first 25 calendar days of month t. We do not make use of analyst identities in constructing the consensus forecast since several studies, including Bradshaw and Brown (2005) and Bonini, Zanetti, Bianchini, and Salvi (2010), have found no systematic difference in analyst target price forecasting abilities. We note that defining the consensus target price as the median or employing various schemes for over-weighting more recent target prices and down-weighting target prices announced at the beginning of the month does not alter our results significantly.…”

Do financial analysts' long-term growth forecasts matter? Evidence from stock recommendations and career outcomes

“…In particular, we consider analysts' forecasts of annual earnings for years t þ1 through t þ5, and analysts' target price forecasts, generally believed to have a one-year horizon (Bradshaw and Brown, 2007;Kerl, 2011).…”

Analysts' Consensus and Target Price Accuracy: A Study in Latin America

“…Nevertheless, the information generated by the analysts may contain biases motivated by economic BAR, Rio de Janeiro, v. 14, n. 4, art. 1, e170036, 2017 www.anpad.org.br/bar incentives, such as the increase of traded volume (Beyer et al, 2010;Bradshaw, 2004;Bradshaw, Brown, & Huang, 2013;Bradshaw, Drake, Myers, & Myers, 2012).…”