web_istock-858148886.jpg

Why are analysts almost always wrong about Apple?

Even though the financial professionals have access to the most advanced and costly algorithms and predictive models, their forecasts are usually off, and research shows why.

A study of 365 sell-side financial analysts by researchers at four universities found that being able to talk one-on-one with management provided better guidance to analysts' profit predictions than their primary research and annual and quarterly reports.

In this article on Forbes May 17, 2018:

One important finding is that private communication with management is a more useful input to analysts’ earnings forecasts and stock recommendations than their own primary research, recent earnings performance, and recent 10-K and 10-Q reports. Another notable finding is that issuing earnings forecasts and stock recommendations that are well below the consensus often leads to an increase in analysts’ credibility with their investing clients.&nbsp

— W. P. Carey Associate Professor of Accountancy Andy Call co-authored the study "Inside the 'Black Box' of Sell-Side Financial Analysts"

Latest news