Daily Stock Price Targets and Analyst Ratings

What are analyst ratings (Buy, Hold, Sell)?

Analyst ratings are short-hand summaries of a financial analyst's long-form research on a publicly traded company. These ratings, typically issued by sell-side analysts at major investment banks and brokerages (like Goldman Sachs or Morgan Stanley), summarize the analyst's forecast for a stock's performance over the next 12 to 18 months.

The three primary rating categories are:

• Buy / Outperform / Overweight: The stock is expected to appreciate significantly (or outperform the market/benchmark index). This suggests the stock is currently undervalued relative to its expected future value.
• Hold / Neutral / Market Perform: The stock is expected to perform in line with the broader market or index. The analyst sees no compelling reason to immediately buy more shares or sell existing shares, suggesting the stock is currently fairly valued.
• Sell / Underperform / Underweight: The stock is expected to decline or underperform the market/index. This suggests the stock is currently overvalued and faces significant downside risk.

What are stock price targets?

A stock price target is an analyst's specific prediction of the price a security will reach within a set future period, most commonly 12 months. Price targets are the quantitative output of a rigorous valuation model (such as Discounted Cash Flow or P/E Ratio relative valuation) and serve as the basis for the accompanying qualitative rating (Buy, Hold, or Sell).

If an analyst calculates a fair value significantly above the current stock price, they will typically issue a "Buy" rating. Price targets are not guarantees but rather educated estimates used by investors to determine potential risk and reward.

How accurate are stock price targets, and how often are they correct?

Stock price targets and analyst forecasts are predictions and are not guaranteed to be accurate. Multiple studies have shown that analyst estimates often contain significant prediction errors, particularly over longer time horizons.

Key Factors Affecting Accuracy:

• Bias: Sell-side analysts can face pressure to maintain favorable ratings to avoid harming relationships with covered companies or to attract investment banking business, often leading to a prevalence of "Buy" ratings and upward bias in targets.
• Prediction Horizon: Longer-term forecasts (beyond one year) are generally less accurate than near-term earnings estimates.
• Company Size: Estimates for larger, well-covered companies (like those in the S&P 500) tend to be more accurate due to greater information availability and analyst coverage.

While targets are not always correct in isolation, their revisions are highly impactful. When a reputable analyst significantly raises or lowers a price target, it often signals a change in market sentiment that can lead to immediate stock price movement.

Where to find stock price targets?

Price targets are included in official equity research reports issued by investment banks and brokerage houses. While these proprietary reports are often costly or reserved for institutional clients, platforms like GuruFocus aggregate and display this daily analyst ratings data, consensus targets, and price target history in a single, accessible location.

How to compare analyst ratings effectively?

The most effective use of analyst ratings is to view them as just one input in a broader research framework, not as a definitive investment signal.

• Check the Source: Give more weight to ratings and targets issued by well-known, reputable brokerage houses with a demonstrated history of accuracy.
• Focus on Consensus and Trend: Instead of following a single analyst, observe the Consensus Rating (the collective opinion) and, more importantly, the trend of revisions. A consistent upward trend in the consensus target is a much stronger signal than a single "Buy" rating.
• Evaluate the Rationale: If possible, look at why the analyst set the target. Does the rationale align with your own fundamental analysis of the company's valuation, earnings growth, and risk profile?

Which stocks have the highest analyst buy ratings?

This page allows you to filter the data to find stocks with the highest concentration of "Buy" or "Strong Buy" ratings. These stocks represent the current favorites of Wall Street, often highlighting companies with strong projected earnings growth or perceived undervaluation by the analyst community. However, remember to cross-reference these stocks with GuruFocus's proprietary metrics (like the GF Score and GF Value) to perform your own due diligence.

How do analyst ratings impact stock prices?

Analyst ratings have a direct and often immediate impact on stock prices, especially when a rating is initiated or revised for a high-profile company:

• Upgrades: When an analyst upgrades a stock (e.g., from Hold to Buy) or significantly raises a price target, the news often generates positive momentum, leading to increased buying activity and a rise in the stock price.
• Downgrades: Conversely, a downgrade or price target cut can trigger selling pressure as institutional investors re-evaluate their positions, often leading to a temporary decline in the stock price.

This impact is generally a short-term reaction. Long-term performance is driven by the company's actual fundamentals, not the analyst's opinion.