It's fairly well established that actively managed funds on average underperform their benchmarks. I'm not aware of specific research on investing based solely on analyst forecasts but I imagine performance would be even worse using such a strategy. Basically, you are right to be skeptical. All the evidence indicates that the best long term strategy for the average individual investor is to invest in a low cost index fund and avoid trying to pick stocks.

ETA: This recent paper appears relevant. They do indeed find that analysts' target prices are inaccurate and appear to suffer from consistent biases.