The Usefulness of Analysts' Recommendations

The Journal of Investing Summer 2003, 12 (2) 7-18

Posted: 21 Jan 2019

See all articles by Vinesh Jha

Vinesh Jha

ExtractAlpha

David Lichtblau

affiliation not provided to SSRN

Haim A. Mozes

Fordham University - Gabelli School of Business

Date Written: June 1, 2003

Abstract

There are several noteworthy findings here about the usefulness of analysts' buy recommendations in investment decisions. First, recommendations add more value when they are consistent with other signals than when they are inconsistent. Second, other signals, such as earnings revisions and price momentum, add more value when they are consistent with recommendations than when they are inconsistent. Third, recommendations add more value in down markets than in up markets. Finally, recommendations add more value for small-cap stocks than for large-cap stocks. The implications of these results are that recommendation data are more useful 1) when they are corroborated by other signals; 2) when more judgment is needed to distinguish between “good” and “bad” stocks; and 3) for stocks that are less informationally efficient.

Suggested Citation

Jha, Vinesh and Lichtblau, David and Mozes, Haim A., The Usefulness of Analysts' Recommendations (June 1, 2003). The Journal of Investing Summer 2003, 12 (2) 7-18. Available at SSRN: https://ssrn.com/abstract=3314519

David Lichtblau

affiliation not provided to SSRN

Haim A. Mozes

Fordham University - Gabelli School of Business ( email )

113 West 60th Street
New York, NY 10023
United States
212-636-6124 (Phone)
212-765-5573 (Fax)

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