Glossary
Price Target
An analyst's published estimate of where a stock's price will sit roughly twelve months from now.
A price target is a forecast attached to an analyst's rating. It comes from a model of the company's future earnings and an assumption about what multiple the market will apply to them, and both halves of that are estimates.
The consensus target quoted on financial sites is simply the average of the individual targets from every analyst covering the stock. Averaging forecasts does not make them accurate; it makes them one number instead of fifteen.
Targets are revised often, and frequently after the price has already moved, which means the consensus can trail the market rather than lead it. ConvictionStocks reports what analysts have published without adding a target of its own, because a target of ours would be a prediction rather than a fact.
Learn this properly
Lesson 10: Understanding Analyst RatingsWhat Buy, Hold, and Sell ratings actually mean, how analyst consensus works, and why you should use them carefully.
Related terms
- Analyst RatingA professional stock researcher's published opinion on a company, usually summarized as Buy, Hold, or Sell.
- P/E Ratio (Price-to-Earnings)The share price divided by earnings per share: how many years of current profit you are paying for at today's price.
- Earnings ReportA company's quarterly public account of what it earned and spent, filed with regulators and released on a set date.
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