How investors should approach target prices

Link: How investors should approach target prices

Quote –> “… look at the structure of target prices for 618 companies traded on the Toronto Stock Exchange (TSX) and found some interesting data points:

• Sixty-one per cent were rated a “buy” and 67 per cent were rated a “buy” or “strong buy.”
• Thirty-one per cent of recommendations were rated a “hold.”
• Only 2 per cent of recommendations were a “sell” or “strong sell.”
• The consensus price target on average was 42.1 per cent above the prevailing share prices.
• The median target over prevailing share prices was 15 per cent.

These statistics are harmless at face value but a clear bias toward positive recommendations can be seen. Indicating that only 2 per cent of the stocks out there are worth selling probably makes winning at investing seem a little easier than it is in reality.”

It is easier to uses Rules to determine entry and exit points.   Slow to enter and quick to exit.  Ignore Target Prices, but it is best to speak to a Trusted Wealth Professional.

It is easier for Analysts to predict revenue, or even profitability, but not share price. There are too many variables affecting share price.  Just now the USA Federal Government is announcing a delay to the HealthCare proceedings, thus impacting the timing of the Tax Reform.  And all of this on a day when Google was fined close to $2.7B USD for antitrust violations pertaining to its Google’s Shopping search comparison service (Tech sector is dropping).