Thread: What is the meaning of the target price set by stock analysts?

Is that the price they think the stock should reach in the next 12 months? Does it mean their analysis is only valid up to that price? Or is it something else? I've noticed that sometimes there's a wide gap between the 12-month target price and the fair value calculation.

It is just a wild guess. Nothing more. Many times it is an overly optimistic hope more than anything else.

Investors set a target price at which point they are willing to sell at a gain or a loss.

"target price" is a highly reliable indicator whether a stock analyst will either keep his job in the next six months, or get a bonus at year's end. if the target price is reached, then the analyst gets to keep his job and most likely to get a bonus. if the stock fails to reach target price, that is one strike against the analyst.

in the first place, know that stock analysts are paid to make predictions so that people will buy the stock that their firms are selling. Since they are selling these stocks, they ought to have a target price in place so that when you, the client buys, you will have something to pin your hopes to.