Financial analyst stock recommendations and earnings forecast revisions

I examine the relation between financial analysts' two outputs: stock recommendations and earnings forecast revisions. I present a simple theoretical framework that explains the variation in their consistency, and the variation in their incremental information content. The main feature of this framework is that stock recommendations are the output of a valuation model, while the forecast revisions are the output of an accounting model. Overall, the empirical evidence supports my hypotheses that, the more similarly the accounting and the valuation models process the analyst's information, the higher the consistency between the two outputs, and the higher (lower) the incremental information content of the forecast revision (stock recommendation).