Are All-American Analysts Better: A Study Using 2010 IBES Target Prices?

How well do All-American analysts identified by Institutional Investor perform? We use 12-month horizon IBES target price data and matching CRSP actual price in analysis of the relative performance of the 2010 All American analysts. Two sample t-tests suggest their target price estimates are biased downwards on average but these estimates are less dispersed around the true value. Multiple regression analysis supports this finding, after controlling for the number of companies and the number of industries that the analysts cover as well as firm size, growth, leverage and firm industry.