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These analysts meet with management and other stakeholders to determine a company’s current and future value based on its financials and growth potential. They use this information to generate earnings estimates and target prices that help them form their overall ratings. So, a price target is what analysts think the stock is worth per share.
If you take the average of analyst price targets, you can estimate what price a stock could reach. So, if a stock is trading below its average target price, there is a solid chance it will increase its price. But If a stock is trading more than 50% below its average price target, the company has a very high upside, which is why I recommend investors check out stocks such as MKS Instruments, Inc. (MKSI), Medifast Inc. (MED), and Amarin Corp. PLC ADR (AMRN).
