A word about Wall Street price targets …

by Crista Huff

 

The biggest reason that I ignore Wall Street’s price targets is that they are derived by fundamental analysts, based upon P/E norms, and inhibitions to step too far away from the pack of analysts who are commenting on a particular stock.

When I worked at Morgan Stanley, we often joked that the fundamental analysts worked on the opposite side of the building from the technical analysts, and they seemed to be oblivious to each other’s work. But as far as I’m concerned, fundamental analysts’ price targets are almost useless, whereas price targets based upon valuation and previous trading patterns can often be quite accurate.

Now that Applied Materials (AMAT) reported yet another blowout quarter on August 18, many analysts are raising their price targets by another $5 per share — a day late and a dollar short. Why weren’t these analysts pounding the table on AMAT before the earnings report? If the stock’s extreme undervaluation was obvious to ME, why wasn’t it obvious to THEM?

Not only did I recommend the stock repeatedly, in recent months, but I urged Cabot Undervalued Stocks Advisor subscribers on both August 16, and the morning of August 18, that the earnings report was imminent, and that the stock would likely react well.

I will continue to mention stocks’ most likely price action and trading ranges to investors. I’m not prone to exaggeration, but if I think a stock can rise 30-100%, I will say so, and my opinion will not be reined in by those of the more constrained Wall Street analysts.
 

Send questions and comments to research@goodfellowllc.com.

Happy investing!

 

 

Crista Huff

President

Goodfellow LLC

 

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Crista Huff is a stock market expert and a conservative political activist. She is the Chief Analyst at Cabot Undervalued Stocks Advisor; owner/operator of Goodfellow LLC, an outperforming stock market website; and she works with End Global Governance and issues groups to defeat the Trans-Pacific Partnership trade agreement. Send questions and comments to research@goodfellowllc.com.

 

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