Target Price Achievement and Target Price Accuracy Models: An Analysis of Advisory Firms’ Recommendation for the Indian Banking Stocks

Abstract

A target price is the projected price level of a financial security stated by an investment analyst or an advisor. It represents a security’s price that, if achieved, results in a trader recognizing the best possible outcome for his investment. The study considers financials, demand and expectations for measuring the effectiveness of target price accuracy. The present study has two objectives: (a) to construct the model of target price achievement and (b) to construct the model of target price accuracy. Further both the objectives are not limited only to one year performance (period bound model) but are also extended to performance till date (non-period bound model) testing. The study considered all the banking stock listed on the National Stock Exchange (NSE). The study concludes with the models and found that promoters’ holding is the most significant indicator, for measuring target price accuracy, followed by financials, price-to-book ratio, for the Indian banking stocks.