If target prices reflect the true values of stocks, they should direct prices towards intrinsic values. But analysts’ optimism and use of less sophisticated valuation methods have been found to impede target price informativeness. We find that target price optimism has a positive effect on the...

This paper examines the effect of conditional conservatism (CC) on analysts’ target prices. Due to the long-term nature of target prices, the dynamic effects of CC are more difficult to incorporate in target prices than in earnings forecasts. Accordingly, we expect and find that the effect of...

If target prices are reflective of the true value of a stock, they should correctly reflect the market’s over- and underpricing, that is, be negatively associated with investor sentiment. However, empirical evidence of Clarkson et al. (2020) finds the opposite. Prior research offers two...