Analysts are a major source of information in equity markets. Therefore, their earnings forecasts and stock recommendations are likely to be important for understanding how equity markets work. Analysts' earnings forecasts arc generally, optimistic and their buy/hold/sell recommendations influence stock prices. However, whether (and how) they underreact or overreact to information Is not yet clear. The present thesis discusses tile underreaction/overreaction issues and examines the information contents of analysts' recommendations.