When the economy gets shaky and companies slow down, stock analysts actually start lying to themselves and making even wilder predictions.
SSRN · March 18, 2026 · 6297098
The Takeaway
Macroeconomic uncertainty actually predicts lower future growth, but analysts do the opposite of what logic suggests by raising their targets. This indicates that financial experts prioritize professional reputation and brokerage house biases over objective economic indicators during times of crisis.
From the abstract
This paper investigates how environmental uncertainties relate to the companies' growths, and forecasting behaviors and motives by sell-side analysts. We show that both current levels of and changes in macroeconomic and economic policy uncertainties negatively predict the companies' future growths but positively explain the analysts' growth forecast levels. The findings jointly suggest that analysts do intend to issue the optimistic growth forecasts. We then explore how ESG background of the ana