Is the price target (I know it's opinion based) a general indication how a stock is going to perform in the short term or is it wrong as often as it is right?

Also, I've seen stocks rated as a buy or even strong buy hut the price target shows a significant potential downside. How much weight should the price target receive when evaluating a stock?

ETA: Obviously I'm a stock newbie so be gentle.

This post was edited on 6/30/20 at 9:30 am

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Posted by reb13

Member since May 2010

10905 posts

Posted on 6/30/20 at 9:36 am to Adajax

The price target just depends on if the majority of their clients are long or short.

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Posted by Tigers4life

The great US of A

Member since May 2004

1865 posts

Posted on 6/30/20 at 9:37 am to Adajax

Not accurate at all. Sometimes they will go straight to the target and sometimes it will go in the opposite direction.

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Posted by TheGuitarMan1

Member since Jun 2020

309 posts

Posted on 6/30/20 at 12:31 pm to Adajax

There are tools/products like Starmine that tell you how well stock analysts do. My suggestion is to educate yourself and watch the stock analysts you like over time. I use them to see what the "experts" think, but then decide on my own. I've seen a lot of great reports at old school brokerage firms but reached a different conclusion based on that info. They seem to overthink things and not use some common sense. But, the reports can be quite helpful, including how they determine their PT.

You'll also see analysts push stocks way higher by keep raising the PT. You'll probably see over time that they don't want to just make it a Hold, when maybe that is the appropriate action. They just like the stock. My personal opinion ... for whatever that is worth ... is that Morningstar, in general, is not a great source for stock picks, but they use a very disciplined approach (at least on many stocks), which I like to look at for a more conservative view of stocks that I am thinking about buying, or selling.

In short, I would use the PT as one of many ways to eval a stock ans not reply on it as the most important.

This post was edited on 6/30/20 at 12:36 pm

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Posted by arcalades

USA

Member since Feb 2014

19276 posts

Posted on 6/30/20 at 2:05 pm to Adajax

quote:
How much weight should the price target receive when evaluating a stock?

negative 1 million. means absolutely nothing. only serves the purpose of manipulation and gives people unnecessary jobs at firms to come up with meaningless fodder.

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Posted by Jag_Warrior

Virginia

Member since May 2015

4090 posts

Posted on 7/1/20 at 7:23 am to Adajax

It's a good question.

IMO, price targets are completely meaningless. The only value that I've ever seen is when an analyst from a major firm issues a positive or negative opinion on a company, or initiates guidance, it may move the stock price up or down short term.

What you *may* do, to give yourself some actual, market based data to play with, is look at what the options market has for a +/- trading range for a stock over a given time period. That, at least, is based on probabilities - not just a clickbait/wild arse guess from some analyst. If I'm looking to enter a long position, I'll often sell puts somewhere within that lower predicted range. Short of some sort of black swan event/crazy unexpected news headline near the time of expiration, if I get the stock at that price, I'm happy. If I don't get it, I just bank the premium and do it again at a new strike price.

ETA: I have no idea why people would downvote a legit question. You're new to this. You admitted that. Only a fool would NOT ask, so that he could learn more about what he didn't understand. If people had asked (before buying) how USO worked, they wouldn't have gotten their nads cut off about a month ago.

This post was edited on 7/1/20 at 7:28 am

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