What's a 'Forecast Price'

Burlesque_Babe

In relation to shares - what is a 'forecast price' (I'm trying to learn )

I'm guessing it is a price predicted by analysts/experts, but over what period?

ie : Marks and Spencer - current share price 395.00, but the forecast price is 650.00

Just trying to get my head around stocks and shares bit by bit!

purch

Marks and Spencer - current share price 395.00, but the forecast price is 650.00

I think you might find that those 'Forecasts' have been adjusted a little lower since Tuesday

P.S. They often don't put a time frame on these 'Forecasts' in order to give themselves a little wriggle room

Burlesque_Babe

I think it was last updated on the 7th.

That was just an example though - but what is a forecast price (other than literally what it says it is) and what is it based on - past performance, future speculation?

Mikeyorks

Agree with that and, like weather forecasters, they don't exactly agree. Extract from some broker news today re M&S :-

Morgan Stanley said it no longer thought M&S would be more defensive than the rest of the sector and dropped it to 'equal-weight' from 'over-weight', cutting its price target 44% to 450p.
UBS downgraded the retail giant to 'neutral' from 'buy' and slashed its price target to 425p from 700p.
However, Kaupthing upped its stance on the retailer to 'buy' from 'fair value', saying that the 30% drop in the share price over the past month has been overdone

Geoffo_M

I wouldn't place too much importance on Brokers Recommendations. Use them as guides. Don't forget every company has its own 'inhouse' broker, who is normally going to recommend their own shares. In the past, I have sometimes bought shares where there are 3 or 4 different brokers recommending the same share - but quite often their predictions are wrong. Best use only as a guide, don't buy purely because of a broker's recommendation.

Burlesque_Babe

aah, so it's basically a 'guess/guide' rather than anything mathematical/statistical? OK, I see.

cloud_dog

keren29 wrote: »

aah, so it's basically a 'guess/guide' rather than anything mathematical/statistical? OK, I see.

It is indeed. Another way to look at house broker recommendation / targets it to do the opposite; you'd be amazed at how frequently the opposite occurs (this is slightly tongue in cheek and not meant as advise) Although it is quite a common occurance

cloud_dog

EdInvestor

The broker's target price is an estimate of what the company is worth based on what it has told the broker's analysts about the state of its business.Applies to shares which are a Buy, ie currently priced under the target.