Financial analyst target price forecasts and analysis of financial recommendations: The case of Borsa İstanbul

Financial analysts are one of the important actors of stock markets, based on their knowledge and experience of companies and stocks in stock markets. Individual and institutional investors who want to invest their savings with stock investments can direct their investments by taking into account the target price estimates and financial recommendations of financial analysts. Therefore; Financial analyst forecasts and recommendations are important for stock investors and companies to which stocks belong, on the one hand, and institutions providing investment banking services on the other. In the study, financial analyst target price estimates and financial recommendations for stocks in Borsa Istanbul covering the period January 2010-December 2017 were discussed. The success level of target price estimates of stocks against realized prices and the harmony between two variables were analyzed in terms of various factors with correlation analysis. In addition, the relationship between financial forecasts and variables such as stock market index, exchange rate, interest rates and gold prices was analyzed with correlation analysis. The level of influence between the target price estimates and financial recommendations of the stocks and the realized prices of the stocks were also analyzed with regression analysis and analyzed with Granger and Todo Yamamoto causality tests. The effects of parameters such as stock market index, exchange rate, interest rates and gold prices on financial analyst forecasts were also analyzed with causality tests. Findings have shown that target price estimates have higher performance, especially in the short term. It has also been observed that the level of success is higher in the financial forecasts of the industrial sector from a sectoral point of view, and in the forecasts towards purchasing in terms of financial advice. When the financial estimates are analyzed in terms of their compatibility with the financial parameters, it is seen that the harmony between financial estimates and stock market index has the highest correlation coefficient. When the causality relationship between financial estimates and realized prices is considered, it is seen that there is a mutual interaction in terms of both variables. When the financial parameters and financial analyst estimates are evaluated in terms of causality, it is determined that the stock market index, which is among the parameters, is effective in financial forecasts made for all sectors.