Analyst Information Intermediation during the COVID-19 Pandemic

We use the COVID-19 pandemic to examine how this tail risk event affected analysts research production and their information intermediation role. Analysts markedly increase their research activity in the initial months of the pandemic: the number of quarterly earnings forecasts increases by 72%, revenue forecasts by 80%, cash flow by 59%, dividend by 11%, target prices by 154% and stock recommendations by 88% in March 2020 compared to the same pre-pandemic month. Forecasts issued during the pandemic associate with significantly higher errors compared to a comparable pre-pandemic period. Analysts aggressively revise their forecasts during the pandemic compared to the pre-pandemic period: the average absolute revisions range between 142% for revenue forecasts and 9% for dividend estimates. Price reactions to revisions in analyst forecasts and stock recommendation are incrementally higher during the pandemic though lower for target prices. This effect is magnified in periods where investors actively search for information about the pandemic and the stock market as captured by google searches. Investors value more analyst private information discovery role than their role in interpreting public information during the pandemic.