Picking Stocks Based On “Consistent” Earnings Surprises

Analysts play an important role in the market, setting expectations and giving investors with limited resources research either to base their investments on or to use as a starting point for ideas, so systemic bias among analysts could result in systemic over- or under-buying among investors.

“We have also been concerned with this topic and concluded that when potential biases are removed the information content of analysts’ forecasts becomes much more significant,” says a recent Citi report from Chris Montagu and Liz Dinh introducing new academic research on the topic.

Performance forecasts against stocks recommendation