Business Profit forecasts: analysts are often wrong

Profit forecasts: analysts are often wrong

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Dhe stock analysts are optimists is by no means a new finding. It is in the nature of things, because whoever is considering buying shares must be convinced that things are going well.

The suspicion that analysts are fundamentally too optimistic has always been held. The multi-family office HQ Trust has now impressively substantiated this assessment with numbers.

Fund manager Sven Lehmann, divided into 20 industries, compared analysts’ estimates of the past 30 years with reality. And therefore the forecast profit exceeded the ultimately generated by an average of more than 16 percentage points.

Real estate boom overlooked

Most of the time, the experts were at the banks, where the deviation was more than 43 percentage points – and that with an immense spread, which means that the forecasts of the individual experts were sometimes far apart. Apparently, the analysts were “surprised by the horror news from the banking industry,” says Lehmann.

Conversely, they probably did not notice the ongoing real estate boom either. Because here the forecasts were almost 7 percent too low on average – the only industry where this was the case.

The forecasts seem to have applied better to the auto industry, where they were practically exact on average. “However, the deviations were also greatest here,” says Lehmann.

The real estate industry was also the only one in which analyst forecasts were often too low (17 years) than too high. In contrast, in the “personal care, drugstore and grocery” sector, the analysts were not too pessimistic in any year.

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