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How Do Analysts Value Italian Banks? An Empirical Analysis

Author

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  • Gianfranco Gianfrate

    (Università Bocconi, Milano)

  • Roberto Vincenzi

    (Università Bocconi, Milano)

Abstract

The literature that examines target prices issued by equity research analysts is vast, and the role of the analytical process and valuation model used to determine target prices has received growing attention by scholars. However, the specific evidence that indicates how professional analysts value banks is scant at best. Due to their peculiar nature, banks are usually valued using approaches that may differ significantly from those applied to non-financial companies. By investigating a unique sample of equity studies that cover the Italian listed companies (2005-2011), we determined the approaches that are used and their relative performance in providing accurate valuations and target prices. Fundamental valuation models appear to perform significantly better than relative valuation approaches

Suggested Citation

  • Gianfranco Gianfrate & Roberto Vincenzi, 2014. "How Do Analysts Value Italian Banks? An Empirical Analysis," BANCARIA, Bancaria Editrice, vol. 2, pages 32-46, February.
    • Handle: RePEc:ban:bancar:v:02:y:2014:m:february:p:32-46
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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