What is a price target?
A price target is an analyst's estimate of what a stock may cost in about 12 months. When several analysts cover the same stock, their estimates are combined into an average — a consensus price target — with a lowest and a highest estimate. It is an estimate, not a promise.
The range between the lowest and highest estimate shows how much the analysts disagree.
Who sets price targets?
Analysts at banks and brokers follow a number of companies, build a model of expected earnings and work their way to a value. The price target is the result. It is usually published together with a recommendation such as “buy”, “hold” or “sell”.
How to read it
- The average is the figure quoted most often. If the price is below it, analysts on average expect a rise — and vice versa.
- The range between the lowest and the highest estimate matters just as much. A narrow range means the analysts roughly agree. A wide range means great uncertainty.
- The number of analysts matters. An average of 25 estimates is more robust than an average of two.
Take it with a pinch of salt
Price targets are often adjusted after the price — not the other way round. When a stock rises fast, many analysts raise their targets afterwards. Analysts may also work for banks that earn money from the company in other ways. And a price target says nothing about the road there: a stock can fall 20% along the way and still reach the target in a year.
The typical beginner's mistake
Reading the price target as a price the stock will reach. Many beginners buy because the average is 20% above the price and overlook that the lowest estimate may be 15% below.
How you see it in Kiggo
Open a stock and tap “Go deeper into technical analysis”. In the Overview at the top, the analysts' price targets sit alongside the other price levels — lowest, average and highest — with the distance from the price in percent and the number of analysts. Under “What does it mean for you?”, Kiggo works out what a price at the analysts' average would mean for your own shares, in your own currency. Not every stock has price targets: smaller companies are often not covered by any analysts.
Related terms
Frequently asked questions
Where do Kiggo's price targets come from?
Kiggo fetches the analysts' combined estimates from a public data source and shows the lowest, average and highest estimate and the number of analysts. Kiggo does not set price targets itself and gives no recommendation.
How often are price targets right?
Nobody can say in advance. A price target is an estimate for a single point a year from now, and the price moves far more than the targets do. Use the range as a measure of uncertainty — not the average as an answer key.
Why don't all stocks have price targets?
Analysts mainly cover large and mid-sized companies that many investors trade. Small companies and most ETFs rarely have price targets.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated .
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
