GLOSSARY // Fundamentals
Price Target
A price target is an analyst's projected price for a stock, usually on a 12-month horizon, published alongside a rating. Targets come out of valuation models: discounted cash flow, price-to-earnings multiples on forward estimates, or sum-of-the-parts for conglomerates.
Targets tend to chase price rather than lead it. After a stock rallies 30%, targets get raised to maintain the same implied upside; after a crash they get cut. The useful signal is usually the spread and the revision direction, not the level: a wide gap between the highest and lowest target flags genuine disagreement, and a wave of increases on unchanged fundamentals flags momentum, not new information.
A stock trades at $200 with an average target of $250, implying 25% upside, but the 30 individual targets range from $120 to $340. The $120 analyst models a patent expiring in 2027; the $340 analyst assumes a new product line doubles margins. The average is the least informative number in that spread; the two models are where the actual debate lives.
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Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.