1 Year Target Estimates

[lucasrd]

How much should we trust Analyst estimates? For instance, on finance.yahoo.com if you look up a stock they will give you the low, mean, high, and median analyst estimates for the next year?

I ask this because I was messing around with a computer program that indexes the entire stock market with current trading price and those estimates. I can then sort by those where the low estimate is higher than the current price and order by the one with the highest projected gain or by any other number of parameters such as volume, etc...

Just wondering how much merit we should give these "projections".

Thanks

[sweeps]

Re: 1 Year Target Estimates

Put very little faith in analyst's targets and buy/sell ratings. They rarely match reality.

However, there is some value in knowing when analysts downgrade or upgrade a stock. That almost always causes some short-term movement in the stock.

[Bookie]

Re: 1 Year Target Estimates

You might look into their projections for the current year and see how accurate they have proved to be.

.

[humandraydel]

Re: 1 Year Target Estimates

Are you referring to an analyst's target price? or earning's estimates? The price of a stock can react to too many subjective, unpredictable things (politics, world economy outlook, wars, speculation, etc) so I wouldn't place too much faith in target prices. Earnings estimates, however, are based more on fundamentals and should be more accurate. Of course, there can always be unpredictable events which will lower (or raise) the profit of a company.