An analyst price target is a sell-side research analyst's estimate of where a stock's price will be, typically over the next 12 months, paired with a rating such as buy, hold, or sell. A consensus price target or rating is simply the average (or sometimes median) of the individual targets and ratings from analysts who currently cover the stock. Both are opinions built on an analyst's own valuation model, not a guarantee.
What has to accompany a price target
Under FINRA Rule 2241, a brokerage research report that includes a price target must have a reasonable basis for it and must disclose the valuation method used to arrive at the target, along with the risks that could keep the stock from reaching it. If a firm has covered a stock with a rating or target for at least a year, the research report must also include a price chart showing the stock's price alongside the firm's past ratings or targets for up to the last three years.
Reading a consensus
| Term | What it means |
|---|---|
| Price target | One analyst's estimated future price for the stock, usually over 12 months |
| Rating | An analyst's recommendation category, commonly buy, hold (or neutral), and sell, though exact labels vary by firm |
| Consensus price target | The average or median of all current analyst price targets for the stock |
| Consensus rating | A blended score or count across all current analyst ratings |
Because rating scales differ by firm (some use five tiers, others three), a "consensus rating" is typically a numeric average mapped back onto a simplified buy/hold/sell scale by the data provider compiling it, not a label any single analyst used.
Limits of this data
A price target reflects one analyst's model and assumptions at the time it was published and can be stale within days if new company or market information arrives. Analysts covering the same stock can have very different price targets depending on their valuation method and growth assumptions, so a consensus figure can average over wide disagreement. Research coverage is also not universal or symmetric: some stocks have far more analysts covering them than others, and targets can lag real-time events like earnings surprises until an analyst formally updates their model.
Frequently Asked Questions
What does a price target actually represent?
An individual analyst's estimate of where a stock's price will be, usually over a 12-month horizon, based on their own valuation model.
What is the difference between a price target and a consensus price target?
A price target is from one analyst; a consensus price target averages (or takes the median of) all current analysts' targets for that stock.
Do all analysts use the same rating scale?
No. Rating labels and the number of tiers vary by firm, which is why data providers often normalize ratings into a common buy/hold/sell scale to build a consensus.
Are analysts required to disclose how they built a price target?
Yes. FINRA rules require research reports with a price target to disclose the valuation method used and the risks to reaching it.
Does a price target guarantee the stock will reach that price?
No. It is an analyst's estimate, not a guarantee, and it can change as new information becomes available.
On Valence
Analyst price targets and consensus ratings, by stock and by analyst, are available on each stock's forecast page (/stocks/[tickerID]/forecast/analyst) and on the analysts hub (/analysts). This feature requires a free or Pro account.
This article is general information, not investment advice.
