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Financial Analysts of well-known brokerage firms release public stock ratings to provide buy/sell/hold recommendations for investors. These ratings are an attempt to use a company’s current performance to make predictions regarding the company’s future price trend.
The rating process is often complex and takes different data sources into consideration such as financial statements, press releases, general market news as well as info from company conference calls. These ratings are often provided quarterly and for a target date of a year or less.
But how accurate are these ratings, really? Well, we can find out by comparing historic ratings and price targets and with the actual price data.
If you are intrigued to find out more, this post is for you!
This story is solely for general information purposes, and should not be relied upon for trading recommendations or financial advice. Source code and information is provided for educational purposes only, and should not be relied upon to make an investment decision. Please review my full cautionary guidance before continuing.
The first hurdle to take is where to get historic analyst ratings that include price targets. For this information I found FinnWorlds.com, which has an Analyst Ratings API.
FinnWorld offers a Starter Plan with a reduced rate of $19.99 for the first month. Be advised that the rate changes to $199 after the first month so if you are just planning to try this API, be sure to cancel before the month ends.
To fetch historic stock prices, I used the Tiingo Historical Prices API. Tiingo offers a free Starter Plan and a Power Plan for $10/month. Of course you can also modify the script to use a different data source.
To limit the number of stocks for which we retrieve ratings I selected the list of NASDAQ 100 symbols since that gives me a convenient number to work with.
Here are the steps to be implemented:
- Fetch a list of NASDAQ 100 symbols
- For each symbol: Fetch the list of analyst ratings for the last 10…
