Many analysts are reducing their price targets on growth stocks during this dip.
Yes, price action drives narrative.
But if we look at their models, the revenue growth & margins projection doesn't change.
They're still expecting the companies to execute.
So what changed?
Yes, price action drives narrative.
But if we look at their models, the revenue growth & margins projection doesn't change.
They're still expecting the companies to execute.
So what changed?
The terminal multiple (based on earnings, sales, cash flow, EBITDA, etc) assigned to a company changed to a greater extent.
They're trying to figure out what the market is going to pay in the future.
To avoid looking silly, it won't be too far from the herd.
They're trying to figure out what the market is going to pay in the future.
To avoid looking silly, it won't be too far from the herd.
No matter how many certifications they have under their belt, they will guesstimate future multiples based on current market sentiments.
I still do look at analyst's reports from time to time.
To try and understand their thinking behind growth & margins.
I still do look at analyst's reports from time to time.
To try and understand their thinking behind growth & margins.
They spend a great deal of effort into studying the industry and company.
But when it comes to price targets, ignore them.
Apply a reasonable terminal multiple yourself.
But when it comes to price targets, ignore them.
Apply a reasonable terminal multiple yourself.
This is the end of my short thread.
I hope you enjoyed it.
If you like this, follow me here @steadycompound
I write about investment concepts, business breakdowns and growth philosophies.
I hope you enjoyed it.
If you like this, follow me here @steadycompound
I write about investment concepts, business breakdowns and growth philosophies.
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