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The effect of 52 week highs and lows on analyst stock recommendations

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  • Mei‐Chen Lin

Abstract

In this study, I examine whether analysts use the 52 week high and low as reference prices for recommendation revisions. My results show that the proximity and recency of the 52 week high increase the odds of stocks being upgraded. When analysts upgrade a stock whose 52 week high occurred in the distant past, they provide more valuable information to investors than that based on the proximity ratio of the 52 week high. More‐experienced analysts provide more valuable recommendations when they upgrade (downgrade) based on either the nearness or recency of the 52 week high (low) than less‐experienced analysts do.

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  • Mei‐Chen Lin, 2018. "The effect of 52 week highs and lows on analyst stock recommendations," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 375-422, November.
    • Handle: RePEc:bla:acctfi:v:58:y:2018:i:s1:p:375-422
    DOI: 10.1111/acfi.12312
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    3. Peter Clarkson & Alexander Nekrasov & Andreas Simon & Irene Tutticci, 2020. "Target price forecasts: The roles of the 52‐week high price and recent investor sentiment," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(9-10), pages 1365-1399, October.
    4. Li, Fengfei & Lin, Chen & Lin, Tse-Chun, 2021. "Salient anchor and analyst recommendation downgrade," Journal of Corporate Finance, Elsevier, vol. 69(C).

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