Disagree. In most broking houses, price targets are only 12mth...

Disagree. In most broking houses, price targets are only 12mth forward looking objectives.

If the report is well written an analyst will explain their rationale for the price objective - and will contain analysis which is thematic and attempt to provide substance to their forecasts.


The regular corporate access that an analyst has (with the actual company and its competitors) gives them the ability to forecast earnings a little more accurately than most people. Hence, the reason why fund managers use and compensate these people.

Added to this, the report contains a forecast on future earnings etc - you have the ability to use your own rationale (or the analysts) to determine the prospective increase (or decrease) in price. This is what portfolio managers (and their analysts do all the time).

This is why analysts are consistently ranked by their clients (people who manage millions and billions of dollars), and why some receive 7 figures.

Hence, I disagree with the comment "has great growth prospects and may double in 3 years (for example) then it never gets captured in this type of report, because the analyst cant be too over the top".

I have read some fantastic research that clearly articulates a companies potential (or key risks and downsides) and you can see it in their written piece and in the attached financials.

I have also read research that should have been written on toilet paper as it was only useful for one thing.

TheGimp