Från Prognoser till Känslor: Introducerar Riktkursoptimism som en Sentimentindikator : Undersöker Kopplingen Mellan Analytikers Optimism och Ekonomiskt Sentiment i Sverige

In this paper, we investigate whether analysts’ general price target optimism in the Swedish equity market can serve as an alternative measure of Swedish economic sentiment. For this purpose, we develop three measures of optimism: A simple monthly median of price target optimism, a fixed effects regression controlling for stock and analyst influences, and an extended version that also accounts for general market trends. These are compared to established sentiment indices reflecting household, business, and investor sentiment. Our correlation analysis reveals that price target optimism is strongly associated with household sentiment. The relationship with business sentiment is moderate but less clearly defined, likely due to data limitations. For investor sentiment, results are inconclusive, as the volatility of investor sentiment compared to our estimates of price target optimism complicates interpretation. Principal component analysis further shows that the fully adjusted regression-based optimism measure shares a common factor with the sentiment indices, while the median forecast measure is inversely related to this factor. These results suggest that when properly adjusted, price target optimism can reflect certain aspects of sentiment, especially those tied to household sentiment. We consider our results a proof of concept, suggesting large potential for a complementary measure of economic sentiment that may offer unique advantages over traditional sentiment indices, such as more timely updates and reduced reliance on traditional survey methods.