Sell-side analysts make good predictions in Brazil?

Abstract

We analyze the performance of consensus forecasts and recommendations of sell-side analysts in Brazil from three measures - bias, accuracy and informativeness. The sample included 195 stocks listed on the BM & FBovespa, 75 brokers and 569 analysts. We apply OLS with panel data for a total of 8477 observations and found: i. optimistic bias and focus on recommendations to purchase, even when the target prices suggest pessimism; ii. analysts learn from mistakes, reducing their biases; iii. optimism in forecasts has positive relationship with the dollar variation and variation with negative interest rate.