Relative valuation and analyst target price forecasts

@inproceedings{Da2011RelativeVA,
  title={Relative valuation and analyst target price forecasts},
  author={Zhi Da and Ernst Schaumburg},
  year={2011}
}
We document that within industry relative valuations implicit in analyst target prices do provide investors with valuable information although the implied absolute valuations themselves are much less informative. Importantly, our findings are not merely a small stock phenomenon but apply to the sample of S&P 500 stocks and do not rely on trading at the exact time of announcement. Using a large database of target price announcements from 1997 to 2004, we construct a simple strategy based on… CONTINUE READING

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