Interesting stuff that you have written, but it doesn't fit in with the reason why analyst's have price targets on the stocks in their coverage.
They have price targets because their bosses require them, and probably their bosses require price targets because it makes retail investors happy, maybe, I don't really know the reason.
If an analyst makes a BUY recommendation on a $20 stock, and gives a price target of $27, and then nothing special happens, but the stock spends two months drifting up to be $27, the analyst doesn't change his rating. He probably doesn't do a thing, and waits for the next quarterly report to revise the price target. If things are fine, and the shares at that time are $30, he just makes the price target $37, and keeps the BUY rating.
That's how it works.
The analyst exists to give knowledge of the company and industry, and then tell you what stocks he thinks will go up, and which will not. Since the analyst isn't a trader and isn't encouraging you to trade, the price target is just an irritating distraction. |
