Analysts' Stock Views and Revision Actions

Posted: 13 Jan 2021

Date Written: October 15, 2020


This study analyzes the consistency between analysts’ stock views and their revisions of earnings forecasts, price targets, and recommendations. A hidden Markov model (HMM) is employed to extract analysts’ views. The results show that consistent revisions (i.e., upgrades accompanied by favorable views and downgrades accompanied by unfavorable views) more effectively trigger the stock price reactions than inconsistent revisions. The rigidity of the stock views (i.e., views are unlikely to change) negatively impacts the stock price reactions. The study highlights the importance of inferring analysts’ implicit stock views, as it influences the effectiveness of their stock research outputs.

Keywords: Earnings Forecasts Revision, Stock Recommendation Revisions, Price Target Revisions, Stock Views, Hidden Markov Model; Market Reactions

JEL Classification: C13, M41, G14, G20

Suggested Citation

Li, Tao, Analysts' Stock Views and Revision Actions (October 15, 2020). Available at SSRN: or

Tao Li (Contact Author)

SUNY New Paltz ( email )

1 Hawk Drive
600 Hawk Drive
New Paltz, NY 12561-2443
United States

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