An Empirical Analysis of Analysts' Target Prices: Short-term Informativeness and Long-term Dynamics

Journal Article (Review;Journal)

Using a large database of analysts' target prices issued over the period 1997-1999, we examine short-term market reactions to target price revisions and long-term comovement of target and stock prices. We find a significant market reaction to the information contained in analysts' target prices, both unconditionally and conditional on contemporaneously issued stock recommendation and earnings forecast revisions. Using a cointegration approach, we analyze the long-term behavior of market and target prices. We find that, on average, the one-year-ahead target price is 28 percent higher than the current market price.

Full Text

Duke Authors

Cited Authors

  • Brav, A; Lehavy, R

Published Date

  • January 1, 2003

Published In

Volume / Issue

  • 58 / 5

Start / End Page

  • 1933 - 1968

International Standard Serial Number (ISSN)

  • 0022-1082

Digital Object Identifier (DOI)

  • 10.1111/1540-6261.00593

Citation Source

  • Scopus