Price Target

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Definition of 'Price Target'

A price target is a forecast of the future value of a security, typically a stock. It is typically based on an analyst's assessment of the company's financial health and prospects. Price targets are often used by investors to make buy or sell decisions.

There are a number of factors that analysts consider when setting price targets. These include:

* The company's historical financial performance
* The company's current financial position
* The company's future growth prospects
* The company's competitive landscape
* The overall market environment

Analysts may also use a variety of valuation methods to arrive at their price targets. These methods include:

* The discounted cash flow method
* The price-to-earnings ratio method
* The price-to-book ratio method

Price targets are not always accurate. There are a number of factors that can affect a stock's price, and analysts cannot always predict the future. However, price targets can be a useful tool for investors to get a sense of the potential value of a security.

Here are some additional things to keep in mind about price targets:

* Price targets are typically expressed as a range, rather than a single number. This is because there is always some uncertainty about the future value of a security.
* Price targets can change over time, as analysts' views of a company's prospects change.
* Price targets are not always based on fundamental analysis. Some analysts may also use technical analysis to set price targets.

Price targets can be a useful tool for investors, but it is important to remember that they are not always accurate. Investors should always do their own research before making any investment decisions.

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