Target Price In A Nutshell
Using fundamental data, you would want to really dive deep into the numbers to gather all the information you would need, along with getting a feel for how the trends are going to understand where price should be. Fundamental data is certainly one way to go, but it could be omitting important technical data such as volume and where the price is relative to the moving averages. More people would tend to agree with fundamental analysis because they can relate to a well performing company and feel safe investing.
Next there is technical analysis, and this is the least accepted out of the two, because it takes into account little or no fundamental information. A simple way to determine a target price would be to look at prior support and resistance levels, and use those as your points. What to look at would be the volume around these areas to see if many people agreed that price should move. Also, you could look at tools such as the Fib retrace or extension, which use the Fibonacci numbers to help predict where price is going to go.
If there were ever a more varying number out there, Target Price would certainly rival it. First, a target price is a determined price that is usually unique to the creator, of where they believe the stock is going to end up. Having a target of where you believe the stock could go is key, but with target pricing, it varies differently between people because there is not one set way on how to calculate a target price. You can use pure fundamentals, a mix of fundamentals and technical analysis, or strictly technical analysis.
Closer Look at Target Price
If you are going to attempt to set a target price, I highly recommend using as much useful data as you can, because this will take into account all of the factors that potentially drive price. Again, this target can become very individualized as there is not a set standard on how to calculate a target price. Be sure to research what investment firms are saying and what people in your investment community are saying. If you price is substantially off, maybe go back a recalculate, but if you’re only off slightly, do not worry because they probably did not use the same method as you to find their target price. A useful number, be sure to use it in conjunction with other data to help you get the best odds of predicting the right direction of your chosen equity.