Are Rankings of Financial Analysts Useful to Investors

Several institutions issue rankings of financial analysts based on the accuracy of their price and EPS forecasts. Given that these rankings are expost they may not be useful to investors. In this paper we show that trading strategies based on perfect foresight and on past rankings outperform a passive strategy. In addition, we report that investors are better off following analysts that issue accurate price targets rather than following those with accurate EPS forecasts.