A seminar I went to a couple of years ago run by the ASX had a...

A seminar I went to a couple of years ago run by the ASX had a speaker who was a financial analyst for a significant Wealth Management group.

He had previously trained as an engineer, and hence had degree level mathematical capabilities.

At the seminar he showed some very long term research they had done into broker share price targets.

The research did a comparative study looking at the analysts price target v the actual price the stock had reached in a 12 month time frame. It was done for a very large sample of ASX stocks across multiple analysts data.

The result ...

The correlation was a small negative!

That means that not only were broker price targets unrelated to the future share price, they actually were worse than random.

Are you aware that as of now there are broker price targets for PNV ranging from $1.50 to $2.90. How do we explain that? If these guys know what they are doing, how come there is such variation. And when they do concur, is it simply because they all put the same numbers into the same types of prediction calculations?

The simple reality is that it is not possible to predict future prices of shares and expect to be correct. Far better to pick companies that are growing, buy at the best price we can, and wait.

As for investors following analysts guidance I respectfully disagree. I'd suggest if an investor thinks that is their best option, then they should consider ETFs etc. rather than direct share investment.

I have no idea where the PNV share price will be in 12 months, and wouldn't waste my time predicting it.

I'm monitoring PNV growth, looking for acceleration and deceleration of the rate of growth. That way I can hope to know when the company has stopped growing. Its not complex. In the meanwhile, I buy when the price is a bargain.

I'm yet to see any poster or analyst demonstrate that the results just released by Polynovo were not those of a company growing at a high and accelerating rate.

Saying they didn't reach some pre-set analysts target more likely suggests the target was poorly construed rather than suggesting anything about Polynovo.

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