what is a price target 
a price target is an analyst s projection of a security s future price price targets can pertain to all types of securities from complex investment products to stocks and bonds when setting a stock s price target an analyst is trying to determine what the stock is worth and where the price will be in 12 or 18 months ultimately price targets depend on the valuation of the company that s issuing the stock analysts generally publish their price targets in research reports on specific companies along with their buy sell and hold recommendations for the company s stock stock price targets are often quoted in the financial news media understanding price targetsa price target is a price at which an analyst believes a stock to be fairly valued relative to its projected and historical earnings when an analyst raises their price target for a stock they generally expect the stock price to rise conversely lowering their price target may mean that the analyst expects the stock price to fall price targets are an organic factor in financial analysis they can change over time as new information becomes available factors that help to determine a price targetthe price target is based on assumptions about a security s future supply and demand technical levels and fundamentals different analysts and financial institutions use various valuation methods and take into account different economic conditions when deciding on a price target for fundamental analysts a common way to discern the price target for a stock is to create a multiple of the price to earnings p e ratio by multiplying the market price by the company s trailing 12 month earnings 1in some cases particularly with volatile stocks analysts will look for additional guidance to form their price targets which could include reviewing a company s balance sheet and other financial statements and comparing them to historical results current economics and the competitive environment studying the health of a company s management and analyzing other ratios technical analysts use indicators price action statistics trends and price momentum to gauge the future price of a security one way that they arrive at a price target is to find areas of defined support and resistance an analyst will do this by charting a price that moves between at least two similar highs and lows without breaking above or below those points at any point in between special considerations about price targetstraders will generally look to exit their position on a stock when the originally expected value of the trade has been recognized although price targets can help traders understand when to buy or sell a stock traders can and should determine their own price targets for entering and exiting positions for individual investors the assumptions that underlie analysts price targets are not always obvious investors should use analysts price targets and recommendations as just one part of their investment due diligence which could include reviewing a company s financials and regulatory filings among other resources despite the most careful analysis we cannot know for certain the price at which a stock will trade in the future nevertheless when a prominent analyst changes their price target it can have a significant impact on the price of a security accurately forecasting a security s price movement is based on projection probability numerous tools and lots of experience however even for the most seasoned professional a price target is still a calculated guess some portfolio managers believe that price targets along with research reports function mainly as marketing tools for brokerages and investment banks to generate interest in a security that they re underwriting 