With the caveat below (i.e. maybe it's a term of art that I don't understand), I think that's precisely the misunderstanding I'm talking about.
Say I want to buy stock in a company. To decide which, I look at what analysts have to say about various companies, and pick one that they predict will do well. That's the job of analysts: to give prospective buyers (and sellers) an idea of where a company is heading so we can make buy/sell decisions.
That's very different from grading the "efficiency" of the company. In fact, the analyst's job is to take as many inefficiencies into account as they can. I don't care if this company under pristine circumstances can get 60% profit margins; if the analyst knows the current circumstances can only yield 20%, they had better give me an estimate of performance with 20% in it.
Seen in that light, analysts predicting something different from the company's actual output is clearly an analyst failure. But do notice that this doesn't mean the stock should ignore the error, since buy/sell decisions are made on the basis of analysts' expectations.
Say I want to buy stock in a company. To decide which, I look at what analysts have to say about various companies, and pick one that they predict will do well. That's the job of analysts: to give prospective buyers (and sellers) an idea of where a company is heading so we can make buy/sell decisions.
That's very different from grading the "efficiency" of the company. In fact, the analyst's job is to take as many inefficiencies into account as they can. I don't care if this company under pristine circumstances can get 60% profit margins; if the analyst knows the current circumstances can only yield 20%, they had better give me an estimate of performance with 20% in it.
Seen in that light, analysts predicting something different from the company's actual output is clearly an analyst failure. But do notice that this doesn't mean the stock should ignore the error, since buy/sell decisions are made on the basis of analysts' expectations.