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Factors of Target Price Accuracy on Russian Financial Analysts Market

Student: Kosiuk Ekaterina

Supervisor: Tamara Teplova

Faculty: Faculty of Economic Sciences

Educational Programme: Financial Markets and Financial Institutions (Master)

Final Grade: 7

Year of Graduation: 2019

A lot of money is being spent on equity research, and forecasted target prices are highly important for investors because of their influence on investment decisions. Therefore, it is significant to realise factors having impact on target price forecast errors and the overall accuracy of these forecasts, both for investors and for analytical companies. Our work aims to answer both these questions for the Russian stock market. We have found 11 factors related to financial analysts, covered companies and the market that have significant effect on the forecast inaccuracy. Stability of our results is proved by reiteration of the main regression model for several different accuracy indicators, with each having its own interpretation and specific importance for investors. As for the accuracy estimation on the Russian stock market, we show it is rather low: only 26% of forecasts reached a target price somewhere on a forecast horizon. These results are below than ones for developed markets. At the moments where a stock price does not correspond with the forecast direction (price rise or drop), which is 91% of days on average, an actual stock price deviates from a target price by an average of 24%. We also provide a rating of the main analytical companies on the Russian stock market.

Full text (added May 28, 2019)

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