Published analyst expectations, price targets, and buy/hold/sell ratings should not be taken to represent actual expectations, price targets, and ratings for many reasons.
For starters published expectations rapidly become outdated. Large financial institutions that publish these numbers also want to do business with many of the companies they rate. They rarely publish sell ratings even when valuations get absurd. In general, there are many incentives influencing all of these published numbers that don’t necessarily align with the financial models used internally by the same institutions to actually buy and sell stock.
When the price drops dramatically on an “earnings beat” or rises dramatically on an “earnings miss”, it’s usually not just the market being irrational – when that happens, that “earnings beat” was probably actually an “earnings miss” and vice versa. It’s just that the actual expectations don’t match the published expectations.
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