Analysts' Recommendations' Value: a Comparison of the US and European Stock Markets

Do the sell-side analysts’ recommendations worth trusting and bring value to the investors? This topical question was discussed in many papers related to a single market instead of a comparative analysis of two large and developed stock exchanges. In this master thesis, such recommendations are analyzed across the LSE and the NYSE and considering a period between 1 January 2016 and 31 April 2019. The main objective of the paper is to investigate the analysts’ recommendations’ value, and to determine on which market the analysts have more predictive power. Thus, it was found that both American and British markets are feasible to be outperformed by the analysts but it is impossible to highlight any of the markets as they behave almost identically. In addition, considering the level of a preceding recommendation does not strikingly change the picture. It was also determined that investors react stronger to negative and neutral recommendations for larger companies rather than smaller ones.