Because analysts normally differ in their opinion on a company’s future performance, there exists a range of forecasts. By taking an average of all the analysts’ forecasts on a particular stock, a ‘consensus’ forecast can be reached. Analysts will compare their forecasts to the consensus number, particularly when they change their forecasts and either bring them more in to line, or diverge further from the consensus number. Different analysts also focus on different aspects of a company’s performance. For example, some analysts will place more emphasis on the gross profit than operating or post tax profit of a company. Also.
