How to Understand and Calculate Stock Price Targets
What Is a Price Target?
Price targets play a crucial role in financial markets, offering investors and traders a projection of where a security’s price might head. As an analyst’s estimation of a stock’s future value, a price target serves as a vital tool in investment decision-making. Analysts determine these targets by evaluating a company’s current valuation, historical performance, and potential earnings, aiming to predict the stock’s worth over the next 12 to 18 months.
Despite being educated guesses, price targets can significantly influence investor actions, especially when issued by reputable analysts. Understanding how price targets are determined can empower investors to make more informed decisions about when to buy…
