Learn / Valuation and price targets Go to Overview 1. The multiples research uses 2. Choosing comps and justifying a multiple, Pro 3. The DCF in a research model, Pro 4. Setting the twelve month target, Pro 5. Bull, base, bear, and the skew, Pro 6. Sum of the parts and holding company discounts, Pro 7. Reverse DCF: what is priced in, Pro 8. Special cases: banks, REITs, growth, cyclicals, Pro Flashcards, 0 of 17 reviewed Basic quiz Advanced quiz Terms Valuation and price targets
0 of 8 lessons
0 of 17 cards How research analysts value a stock and turn the value into a twelve month target: multiples and what justifies them, the DCF as a check, scenarios, sum of the parts, and the sectors that need their own tools.
A Advanced5 lessons 4 Setting the twelve month target A price target is where you expect the stock to trade in twelve months. That means applying a multiple to the earnings the market will be looking at then, not today. 9 min 5 Bull, base, bear, and the skew One target hides the shape of the bet. Three scenarios with probabilities show the expected value and how lopsided the outcomes are, which is what a portfolio manager sizes on. 9 min 6 Sum of the parts and holding company discounts When segments have different economics, value each on its own multiple, subtract what sits at the center, and decide whether the whole deserves a discount. 9 min 7 Reverse DCF: what is priced in Instead of guessing a value, solve for the growth or margin the current price requires. Then argue whether the company will beat it. 8 min 8 Special cases: banks, REITs, growth, cyclicals Some sectors break the usual tools. Banks are valued on book and returns, REITs on funds from operations, early growth on revenue, and cyclicals on mid cycle earnings. 11 min Q Advanced quiz 10 questions, 80% passes