What is a stock's price target?
Updated on August 24, 2026 · by Alex
A price target is the level an analyst estimates a stock will reach over a twelve-month horizon. It is not a prediction and not a guarantee: it is the output of a model, with the assumptions of whoever built it baked inside.
An analyst projects the company's sales and earnings for the next few years, applies a multiple — often a "reasonable" P/E for that sector — and arrives at a price. Change a single assumption, like the growth rate, and the result moves enormously.
When you see a consensus price target, it is the average of several different analysts. The average hides the more interesting data point: how much they agree with each other. A consensus of 200 where everyone estimates between 195 and 205 means something very different from one where the estimates run from 120 to 280.
Not because of the number, but because of how it changes. Thirty analysts raising their price target after a report tells you the new information improved how the business is perceived. That move in the consensus is signal; the absolute level is far more debatable.
Reading it as a promise. Studies on the accuracy of price targets are consistently bad, and there is a structural bias: historically, buy recommendations outnumber sell recommendations by a wide margin, partly because the banks that employ the analysts also have business relationships with the companies they cover.
The second mistake is forgetting that the price target chases itself. When a stock goes up, analysts raise their targets; when it falls, they cut them. Very often the target trails the price instead of anticipating it.
