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Range of analyst target prices

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  • Miwa, Kotaro

Abstract

This study investigates the informational value of the range of analysts’ estimates of a stock’s fair value, focusing on the price impact of changes in the upper and lower bounds of analysts’ target prices for each firm. The findings show that these changes convey incremental information beyond that captured by the analyst estimate measures examined in prior research. Furthermore, stock prices exhibit a significant underreaction to increases in the lower bound, that is, to upward revisions of the lowest target prices, suggesting that markets underreact when analysts retract their previously most negative outlooks.

Suggested Citation

  • Miwa, Kotaro, 2025. "Range of analyst target prices," Finance Research Letters, Elsevier, vol. 86(PB).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pb:s1544612325016940
    DOI: 10.1016/j.frl.2025.108440
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    References listed on IDEAS

    as
    1. Miwa, Kotaro, 2023. "How quickly do investors react to analyst reports? Evidence from reports released outside trading hours," Global Finance Journal, Elsevier, vol. 57(C).
    2. Tan, Seet-Koh & Koonce, Lisa, 2011. "Investors’ reactions to retractions and corrections of management earnings forecasts," Accounting, Organizations and Society, Elsevier, vol. 36(6), pages 382-397.
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    5. Malmendier, Ulrike & Shanthikumar, Devin, 2007. "Are small investors naive about incentives?," Journal of Financial Economics, Elsevier, vol. 85(2), pages 457-489, August.
    6. Michael B. Clement & Senyo Y. Tse, 2005. "Financial Analyst Characteristics and Herding Behavior in Forecasting," Journal of Finance, American Finance Association, vol. 60(1), pages 307-341, February.
    7. repec:bla:jfinan:v:58:y:2003:i:5:p:1933-1968 is not listed on IDEAS
    8. Alon Brav & Reuven Lehavy, 2003. "An Empirical Analysis of Analysts' Target Prices: Short‐term Informativeness and Long‐term Dynamics," Journal of Finance, American Finance Association, vol. 58(5), pages 1933-1967, October.
    9. Roger K. Loh, 2010. "Investor Inattention and the Underreaction to Stock Recommendations," Financial Management, Financial Management Association International, vol. 39(3), pages 1223-1252, September.
    10. Ivkovic, Zoran & Jegadeesh, Narasimhan, 2004. "The timing and value of forecast and recommendation revisions," Journal of Financial Economics, Elsevier, vol. 73(3), pages 433-463, September.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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