stock bull, just because an analyst has a price target of $160 doesn't mean that they'll issue a sell recommendation based upon the stock reaching that target. That almost never happens.
For example, most analysts now have internal earnings estimate numbers well in excess of what their official published estimates are. They'll wait for October's earnings announcement, up their numbers a bit, and show that their models give them a new, higher price target. It's all rather silly, really.
Heck, even when the earnings announcement doesn't lead to that conclusion, they'll still raise their price target when the stock gets to the old target. A lot of times they'll lower their discount rate on future earnings and thus be able to raise their price target even using the same earnings numbers. Again, it is all rather silly.
That's why price targets are irrelevant to almost all institutional customers. The targets are just contrived BS from a spreadsheet that really doesn't mean anything. As long as a stock is in an uptrend, an analyst with a buy recommendation won't lower the rating, no matter what happens. They're scared of missing the train. They won't lower their recommendation of a stock until well after the uptrend is over.
Every analyst doesn't act like this, granted, but most of them do. |
