What are price targets and how to use them

Traders work on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., November 11, 2022. 

Andrew Kelly | Reuters

I’m a (very happy) Investing Club member and would love to see a discussion of analysts’ price targets. Here are my three most pressing questions:

  • How are PTs arrived at? And why do they vary, sometimes widely, from analyst to analyst?
  • Do the analysts actually expect the stock to reach those targets?
  • Most important, as investors, how should we understand and utilize PTs as we manage our own portfolios and make buy/sell/hold decisions? 

Thanks so much. — Robbi

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