Or bulls disguised as shorts? Everyone has an agenda and it isn't always obvious on this board or any other. May I suggest that new investors ignore posts that don't have any verifiable facts to support an opinion?
Does anyone know of a recommendation and price target history site? Yahoo just lists the average price target and history of the recommendations. As far as I'm concerned the most recent recommendations and price targets carry much more weight that those that are months old. I've searched Morningstar and a couple of brokerage houses without any luck.
I agree, but they've gone to the well once too often. Another secondary at below market will be perceived as a gift to shorts who want to cover.
So you're saying that this pig may be bought out if the P3 trial is good? Who is going to buy it out and more importantly, what basis will they use to value the company. Certainly not current sales or profits, because there aren't any. I suspect it will be projected SALES and PROFITS. At some point these measures are important and virtually every analyst takes this into consideration. Accordingly a company with a potential cancer cure in P1 trials may have a higher valuation than an another company with a P3 trial for a sunburn medication.
You missed my point entirely. Who knows how these analysts come up with their price targets? Is it forecast discounted cash flow? Is it an estimate of future sales based on competing products on the market now? My point is that you perhaps should discount price targets based on volatility and determine what is an acceptable entry point given the risk..
BMY's beta is 0.35 and the price and target are just about the same. Average estimate for S&P 500 this year is about 5 growth. BMY has a 2% dividend. What do you think? On a risk adjusted basis, is it better to buy BMY today or SNTA? At some point every investor needs to make a risk/reward judgment. My point is that analysts seldom tell you what an attractive entry point is; they just tell you where the stock might go if everything works out the way they forecast.
OK genius. Tell us all how to value a no-sales, no-profit biotech. So why is it a buy here? Give us something more than the headlines of some anonymous analyst.
Thanks for the thoughtful response. I hope you didn't spend too much time coming up with this insight. I'm sure that everyone here is most thankful for your input.
Continuing this idea of a fair price, suppose we were to take the target and divide it by the beta. That at least accounts for the volatility and I assume the analyst accounted for sales, profits, etc. In SNTA's case Yahoo lists it as 1.68. So, with a 10 target, fair price is 5.95. With a 6 target, fair price is 3.57. If we take a weighted average of those two prices (you could buy nearly twice as many shares at the lower "fair price"), fair price becomes 4.46. Surprise, that's just about where it is right now.
Of course you could use a different index or time period for the base of Beta. Furthermore, two analysts do not represent all opinions. However, they are the most recent and so we have to assume their sales and profit estimates are the most accurate.
Do we also need to factor in a beta of the price target? 6 to 10 is a huge spread.
Remarkably, there's always someone willing to buy regardless of the recommendation. If these analysts were really going to be helpful, they'd issue "fair price" recommendations that take into account estimates of earnings, sales, and of course the likelihood of achieving those targets. A 50% gain from the current price is great, except if you consider the volatility. No big cap like like AMGN or BMY ever gets downgraded and still has a target price 50% higher than current price.
Good to see that they are still working on developing their science. In the long run, that's what will drive financial success. I'd like to see an update of their scientific progress once per quarter. Even if it is just to say that "development is on track and nothing has changed since the last report" would be helpful.
Let's face it; when there is no news in the investing game, we assume it is bad news.
With 48% short, this analyst was late. How is that so many investors would be short before they said sell? I guess the only explanation is that all those who have already sold are smarter than a paid analyst.
Just a couple days ago some analyst put a $90 price target on FB. Were we to assume it would be a steady rise to that price and more and more people would be willing to paying more and more? Price targets are stupid. They assume that people will buy up until that target and then sell (unless of course the price target is magically increased in the meantime.)
With 48% short interest, there are lots of folks who want to take advantage of a sell rec.
Just speculation on my part; yet given the automation of trading and the massive volume of shares traded, it would seem that those with the least information and resources are least likely to be successful in a short term market trading strategy.
I know that some investors use technicals to make all their buy/sell decisions. I have to assume that all computerized systems always use technicals for any given stock that they have been set to follow. With that, wouldn't make sense to create technicals that support what you are trying to accomplish? For the 200 share retail investor, that isn't possible, but why couldn't the big boy machines do it, especially on an intra-day basis. For many stocks, much of the trading is day trading and if several large traders have a similar sentiment (perhaps brought on by an analyst rating and price target), couldn't they create the pattern that tells everyone else to sell or buy? They can then carry through to a daily chart.
If there isn't any news overnight, look for a down open again tomorrow. Perhaps today's sell rec and 12 target got someone's attention and they'll issue something to counteract the trend.
The activist investor is all over the news and so any analyst must be aware of it. There's nothing specific yet, but that didn't stop the analyst from issuing the sell and 12 price target. Could it be that he wanted to get ahead of any news that might drive the price up? His recommendation benefits those who want to cover short positions and establish long positions. It is unclear whether it will help those who open a short position or close a long position.
Good point, but if I want to buy from Amazon, I go to their site and of course, I get all sorts of advertising based on my searches. I'm not sure how FB could supply better, more targeted ads.