Analysts’ stock recommendations are not only independent, they’re useful

Using intraday data that separated stock market reactions to company news releases issued between 2003 and 2010 from reactions to analysts’ revisions to recommendations, the researchers found that analysts do not rehash the company line. Rather, they help investors with stock valuation by issuing confirming revisions and also reverse prevailing market beliefs by issuing contrary revisions. Only 28 percent of revisions actually dovetailed with the corporate news they followed, the study found. These revisions, moreover, actually offered more information than did the corporate releases. —> Read More