Evaluation of Financial Analyst Forecasts and Recommendations in Terms of Duration and Recommendation Types

Abstract

For investors who want to value their savings in financial markets, it is of great importance to have information about potential investment instruments. Financial analysts in the financial market are an important source of reference for investors who do not have sufficient knowledge and experience in terms of their ability to gather, analyze and interpret information about investment instruments. By interpreting the information, they have obtained, they make predictions about the future value of investment instruments and guide the investors through the advice they offer. In the study, 14,560 target price forecasts and financial recommendations of financial analysts for stocks traded in Borsa Istanbul between January 2010 and January 2018 were analyzed. First of all, the data were handled in general terms, and it was aimed to analyze the performance of the forecasts in terms of their maturities, their level of reaching the targeted prices and the types of financial advice. The relationship between the realized prices of the stocks and the price predictions of the analysts was handled by correlation analysis and evaluated in terms of the strength of the relationship between the two variables. The findings showed that financial analysts were generally successful in target price predictions for the data within the scope of the study. It has been seen that analyst price forecasts are more successful in the short term (within a week after forecasting) and have the highest performance in buying recommendations.