Analysts' Consensus and Target Price Accuracy: A Study in Latin America
| Autor | Rafael Moreira Antônio - Luciana Cardoso Siqueira Ambrozini - Rafael Confetti Gatsios - Vinícius Medeiros Magnani |
| Cargo | Universidade de São Paulo - Universidade de São Paulo - Universidade de São Paulo - Universidade de São Paulo |
Available online at
http://www.anpad.org.br/bar
BAR, Rio de Janeiro, v. 14, n. 4,
art. 1, e170036, 2017
http://dx.doi.org/10.1590/1807-7692bar2017170036
Analysts’ Consensus and Target Price Accuracy: A Study in Latin
America
Rafael Moreira Antônio1
Luciana Cardoso Siqueira Ambrozini1
Rafael Confetti Gatsios1
Vinícius Medeiros Magnani1
Universidade de São Paulo1
Received 3 May 2017; received in revised form 21 September 2017; accepted 25 September 2017;
first published online 14 November 2017.
Editor’s note. Paulo Sergio Ceretta served as Action Editor for this article.
R. M. Antônio, L. C. S. Ambrozini, R. C. Gatsios, V. M. Magnani 2
BAR, Rio de Janeiro, v. 14, n. 4, art. 1, e170036, 2017 www.anpad.org.br/bar
Abstract
Market analysts, by means of issuance of their opinions (earnings per share, target prices, and recommendations),
have been the object of several earlier studies. Previous literature identifies analysts as information intermediaries
between companies and investors, and identifies their role in reducing th e information asymmetry. This study
investigates whether the estimated standard deviations of price-target shares issued by capital market analysts are
informative, and ascertains whether it is possible to identify smaller errors in analysts’ forecasts from the
verification of the consensus am ong them. The study is carried out in Latin American countries, and relies on a
database of 23,367 estimates of target-price shares during the period from October 2010 to January 2017. It also
takes into account the number of analysts who issued the estimates, the company market value, and the government
effectiveness between the countries. The results indicate that the greater the consensus (smaller standard
deviation), the smaller the forecast errors. Thus, the standard deviation of target-price estimates presents an
informative tool to investors about forecast accuracy. Another important result shows that the greater the
government effectiveness, the greater the forecast accuracy of target-price estimates issued by the analysts.
Key words: target-price shares; market analysts; forecasts.
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