The target price is our estimate of the potential future price of a company’s shares. We calculate this based on the company’s estimated earnings growth rate. We don’t estimate when the share price will reach the target price.
We’ll issue a recommendation to sell a company’s shares once the target price is reached or if the current price appears to have peaked prior to reaching the target price. Conversely, we’ll issue a recommendation to sell the shares if the current price falls below 10% of the price at which we issued the buy recommendation and we assess the price is unlikely to recover in the near-term. This is intended to minimise potential losses.