Wafa, I narrowed my target to the C$20-22 target range, not C$30 like you mentioned in your last post.
Also, I have learned through experience that you must review most of the research from the various brokereage firms with a healthy dose of scepticism. For example, if a company is going to tank the analysts are usually limited to rating the company as a "hold" rather than a "reduce" or "sell" because many companies will not do any more underwriting business with a brokereage firm that has rated them even once with a negative sentiment like "reduce" or "sell." We're talking the loss of big, big bucks here for the corporate finance arm of a brokereage house and consequently a major loss for the company thus one rarely sees these types of recommendations occur. Learning what a brokereage house analyst really thinks is generally done much more informally and only if they really trust you. If this is not possible, you can often "read between the lines" with reports or, sometimes, find an analyst working for a brokereage that knows that they will never do any underwriting business for whatever company is in question thus they are able to offer you an unbiased opinion as to its merits. Many independent analysts or analysts on the "buy" side can also offer this type of service.
By the same token, if things are really looking up for a company (as they are in the case of Triton) a research analyst may be able to heap lots of praise on that company and say great things about its stock such as "buy", "strong buy" or "speculative buy" however we now have a new type of credibility issue. No analyst wants to make any recommendation such as the aforementioned and have extremely high price targets that could be a long ways off in terms of what does occur with the company and its share value. What if they are wrong? Thus they keep their price targets fairly low on purpose even if they know a stock is going to take off so that if they are wrong in terms of exactly how high its price does go their credibility with investors isn't badly damaged. Then they modify for this wishy-washiness by continuously adjusting their price targets upwards so that as a stock begins to take off they're always right simply by making mediocre predictions most of the time. Something similar but not exactly the same happens when an analyst thinks a company's share value is going to go down.
If you watch carefully and analyze the analysts you will quickly realize that both of these types of practices happen a lot to which I might add, analysts that do sport extremely strong opinions can be right most of the time but they only have to be really wrong once or twice and they will shunned by most investors. People will always remember foremost those that gave them advice that resulted in loss of money. I think that this is a maxim.
Thus, most of what you and I see are the "wishy-washy" types of predictions every other investor gets to see too (which, as illustrated previously, may partially be our own fault). Once again, if you want to really know what an analyst thinks you must have their complete confidence which very few people actually do have.
I am now purposely leaving out several paragraphs for my claim that Triton is a C$20-22 stock in the next 12-18 months. Just remember the word "confidence." |
