facebookHow can a stock be downgraded by an analyst even when the price target increased? seems counter-intuitive? - Seedly

Advertisement

Anonymous

18 Apr 2019

General Investing

How can a stock be downgraded by an analyst even when the price target increased? seems counter-intuitive?

Discussion (1)

What are your thoughts?

Learn how to style your text

Hey there! Although quite uncommon, I have seen cases like this. This is because fundamental analysis traders/value traders alike believe in having a margin of safety when buying stocks.

In another words, that means they require a certain % of upside to justify the stock pick in their portfolio. Therefore even if their valuation calculations are slightly off the mark, and assuming the market shares their upside viewpoint albeit to smaller extent, these stocks will help them beat the market index return.

As they say in a bull market, every stock is a winner. Therefore in average turbulent times, all the more stock picks matter. Margin of safety is one such measure to make sure you are picking the best out of the bunch.

Write your thoughts

Advertisement