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...

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...