what does the term "1yr target est." mean?

Question

I am refering to stock charts on yahoo finance. And, more specifically, who makes these assertions? Is it what the company claims about it's self? Is it "yahoo.finance's" opinion, or a third party?

all answers appreciated.

Answer 1

Large brokerages hire people the call analysts to guess what will happen to a company in the future and estimate what the future earnings and stock price are likely to be. One of the things they commonly guess (estimate) is a target price for the stock in a year.

I have never heard of a company issuing a target for the future price of its own stock, but they do sometimes issue "guidance" about what they expect in the way of futre sales and new products.

Yahoo finance does not, to the best of my knowledge, make target estimates either. They simply report what the brokerages' analysts predicted.

You have to decide for yourself how much faith to have in the target estimates. I have very little faith in them.

Answer 2

zman492 is just about how I would have answered the question. S&P claims that they make their target estimates for a stock's price based on discounted cash flow and relative pe compared to other companies in the industry.

Let's look at GE current price 34.33 Yahoo target 42.27 S&P targe 45.00. S&P states they based their target in this case based on 20x the 2007 estimated earnings. Nothing about discounted cash flow here. Interesting. Zacks on the other hand has projected a somewhat more conservative price target of about $38.90. The average is about 41.95. Close to the 42.27. Perhaps it is an average of several of the services that offer price projections.

Answer 3

1

Answer 4

How often or when do the analysts make these estimates -- at the beginning of the fiscal year, or whenever they update for a specific company?

Answer 5

Is there any way to track the performance/accuracy of these 1 yr projections?