Analyst Forecasts during the COVID-19 Pandemic: Evidence from REITs

Abstract

The COVID-19 pandemic disrupts capital markets and confuses decision makers. This event represents an opportunity to better understand how financial analysts forecast earnings. We focus on forecasts for Real Estate Investment Trusts (REITs) in the United States, since REITs are relatively transparent during normal times, and since the real estate sector, as a whole, displays wide variations in forecasts during the pandemic. Using data between October 2018 and November 2020, our regression analysis finds that the severity of the pandemic increases analysts’ forecast error and dispersion. Government interventions have an offsetting effect, which is relevant during the more severe times. These results are robust to various measures of the severity of the pandemic. We also find that the pandemic has differential effects across property types, where forecast error rises by more, for REITs, when focusing on Hospitality and Industrial properties, and dispersion rises by more, for REITs, when focusing on Hospitality, Retail, and Technology properties.

Changes in Consumption in the Early COVID-19 Era: Zip-Code Level Evidence from the U.S.

“…The economic implications of COVID-19 have been covered in several studies such as by Atkeson (2020b); Guerrieri et al (2020);and Eichenbaum et al (2020) based on macroeconomic consequences, in studies such as by Alfaro et al (2020); Baker et al (2020a); Anglin et al (2021) and Siddique et al (2021) based on financial markets, in studies such as by Alon et al (2020) or Dingel and Neiman (2020) based on labor markets, and in studies such as by Kuchler et al (2021); Atkeson (2020a); Jones et al (2020) or Chiou and Tucker (2020) based on social distancing and health. Within this literature, this paper belongs to the strand that focuses on the economic implications of COVID-19 on sector-level consumption and on online versus offline consumption.…”