Home > Business Databases, company information, UoM Research > Target Prices – different sources

Target Prices – different sources

target-300x277Professional analysts provide target prices for the companies they research. This information is available at different levels of detail from different sources, and therefore there is not a single source that is always the best when looking for target price data.

“A target price (TP) forecast reflects the analyst’s estimate of the firm’s stock price level in 12 months, providing easy to interpret, direct investment advice.” (Bilinski, Lyssimachou, and Walker, 2013)

Some target price data is freely available online. If you go to uk.finance.yahoo.com for ARM Holdings PLC you will find:

  • Mean target price 1,048.28 UK pence (median, high and low is also available)
  • Number of Brokers(Analysts) 25

This is for 15 November 2013 when the ARM share price closed at 944 (UK pence). Yahoo Finance UK – ARM.L – Analyst Opinion.

Thomson ReutersThomson Research will give you more information behind the analysts’ target prices. It gives you access to the analyst reports that include the reasoning behind target prices. However, this is at the detailed level: the reports describe the target prices of an analyst, or group of analysts. There is no report that describes the consensus target price, such as the ARM mean target price of 1,048.28p (based on 25 detailed broker target prices).

For more detail see Analysts’ Reports on Thomson Research (which unfortunately only works with IE – Internet Explorer).

Thomson Reuters Datastream only gives access to consensus target prices, in contrast to the detailed target prices on Thomson Research. Datastream does give access to historical consensus target prices.

Bloomberg Professional and Thomson One Banker are sources for both consensus and detailed target price data. If you are looking for numbers, rather than the text behind the numbers, for a single company or a small portfolio these are excellent sources.

WRDS-iconThe best source for researchers who want to study target prices is IBES (I/B/E/S – Insitutional Brokers’ Estimate System) from Thomson Reuters on WRDS (Wharton Research Data Services). WRDS provides access, supporting documentation and online support to several databases used by leading accounting and finance researchers worldwide. Like other databases on WRDS, IBES has an excellent research reputation.

Recent University of Manchester research looked at target prices across 16 countries over 2002-2009 and found that analyst target price forecast accuracy is higher than a naive price forecast. The study identified various factors that affect target price accuracy – forecasts are more accurate in countries with higher accounting disclosure quality (Bilinski, Lyssimachou, and Walker, 2013).

References

Bilinski, P., Lyssimachou, D. and Walker, M. (2013) “Target Price Accuracy: International Evidence”, The Accounting Review, 88(3), pp. 825-851.

Acknowledgements

Target image is from An On-Purpose…On-Target Life for 2013 and Beyond (posted Dec 2012 on Retire Then What? blog)

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