This paper studies the heterogeneous beliefs of financial analysts by exploiting a specific feature of their information environment, namely the diversity of stocks and industries they follow. I document that the performances of other unrelated industries play an important role in shaping analysts’ expectations about the state of the world and thereby influence their earnings forecasts. Analysts issue significantly more pessimistic forecasts when they observe salient negative performances of unrelated industries. Those downward biased forecasts are less accurate and undershoot the actual earnings, suggesting that analysts do not acquire superior information from those negative shocks, but rather overgeneralize negative performances of unrelated industries and become overpessimistic about firms’ future prospects.