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Yahoo finance conveniently provides historic ratings from a number of analysts. Unfortunately, each analyst seems to use a different scale: buy/hold/sell, perform/outperform/neutral, overweight/equal weight/underweight, etc.

I've already written a function to scrape this data into R, and I would like to expand it by automatically coding the ratings. I was thinking of using a -1,0,1 system, which would basically encode bad/neutral/good, and trying to shoehorn each analyst's system onto this scale.

I'm sure other people have solutions to this problem, and I'm interested to see what they are before I start working.

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Zach
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These are actually known as equity analyst recommendations, and although the terms differ, virtually all of them grade on a 5-point scale. Much academic research has been done using analyst recommendations, typically using the I/B/E/S database (see, e.g. Sorescu and Subrahmanyam (2006)).

IBES distinguishes five categories of recommendations, labeled 1 through 5, which we interpret as “strong buy,” “buy,” “hold,” “sell,” and “strong sell,” respectively.

Tal Fishman
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  • Where do recommendations like "Sector Perform" and "Sector Underperform" fit on this 5 point scale? – Zach Sep 23 '11 at 16:17
  • Look at this link: http://finance.yahoo.com/q/ud?s=MSFT date 11-Feb-08 – Zach Sep 23 '11 at 16:37
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    Go to finance.yahoo.com and search for MSFT. In the left bar, click on "Analyst Opinion," and then click on "More Upgrades and Downgrades" – Zach Sep 23 '11 at 18:23
  • @Zach Yuck! What an ugly way to present such simple data. Still, it is clear from that page that it is on a 5-point scale. To figure out what the 5 points are, you will need to collect a lot of data and track upgrades/downgrades and the from/to categories for each bank separately. Perhaps someone else here knows of a definitive translation list for all the banks, but sorry, I don't. – Tal Fishman Sep 23 '11 at 18:33
  • @TalFishman IBES normalizes this data from all banks into a normalized scale. This is the only source that I have worked with for upgrades/downgrades that provides both breadth and sanity. – Steve Severance Apr 17 '12 at 00:57